Amazon's new Fire phone, demonstrating the Firefly feature.
Photo courtesy Amazon
By Phil Wahba
June 18, 2014

To dazzle consumers long used to Apple’s (AAPL) iPhone and devices based on Google’s Android operating system, Amazon.com (AMZN) had to make sure its upcoming smartphone offered features they haven’t seen before.

One of the big attention-grabbing features of the company’s new phone, dubbed “Fire” and introduced by Amazon chief executive Jeff Bezos on Wednesday in Seattle, is the “Firefly” button on the side of the device. It allows the user to scan an item with the phone’s camera; Amazon then identifies the item in a split second after sifting through a database of 100 million products. The consumer can then seamlessly add it to his or her shopping card on amazon.com.

Amazon shares shot up 3% when Bezos demonstrated the simplicity of the “scan-to-buy” feature.

“If you’re a mediocre retailer, then this makes you extremely vulnerable,” said Doug Stephens, president of Retail Prophet Consultants in Toronto. “It’s shortening the distance between seeing an item you like and ordering it on Amazon—Firefly is like a trigger.”

The introduction of the Fire phone comes at a time when mobile commerce, defined as shopping facilitated by a phone or tablet computer, is expected to nearly triple to $293 billion by 2018, besting overall e-commerce growth, according to Forrester Research. Amazon, by far the largest online retailer with North American sales of $44 billion last year, already has its eponymous shopping app, and it dominates: According to comScore, some 71% of the time that mobile customers spend shopping on Amazon is spent in the app. (The rest occurs in the browser of a mobile device.)

But how devastating the Firefly ends up being for the competition will be contingent on customers taking to the new phone. That could be a tough sell given how entrenched the iPhone and Samsung Galaxy are after years without Amazon around. One analyst said the Fire phone is too pricey and doesn’t have enough new features to get people to switch over en masse.

“The device is not so compelling,” said Forrester analyst Suchurita Mulpuru. “Amazon already owns mobile commerce and owns it as much as anyone can, but the Fire phone isn’t enough a game-changer or a price-disrupter.”

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