Amazon (NASDAQ:AMZN) became the latest tech company to throw its hat into the crowded smartphone market ring when CEO Jeff Bezos unveiled the Fire Phone at a media event on Wednesday. The device features a 4.7-inch high-definition display, 13-megapixel rear-facing camera, and 2.2 GHz quad-core Snapdragon 800 processor, along with 2GB of RAM. Some of the unique hardware features of the Fire Phone are the front-facing cameras and infrared LEDs that enable the device’s “Dynamic Perspective” functions. This allows users to interact with displayed content by using just one hand to tilt or otherwise change the orientation of the phone.
Not surprisingly, the Fire Phone emphasizes Amazon’s content and services. A full year of Prime membership is included with the purchase of a Fire Phone. The Fire Phone also features Firefly, a tool that can instantly identify any images or music that the device sees or hears. Another feature called X-Ray lets users access extra information about content they are watching. In many ways, Amazon appears to be taking an Apple (NASDAQ:AAPL)-like approach to the smartphone business by emphasizing the Fire Phone’s ease of use and its close integration with the e-commerce giant’s services. While it remains to be seen if the Fire Phone will ignite consumers’ interest, the device appeared to impress Amazon investors. The company’s stock closed up 2.69 percent at $334.38 on Wednesday.
Despite the market’s positive reaction to Amazon’s entry into the smartphone business, Cantor Fitzgerald analyst Brian White doesn’t see any reason for Apple to worry. “Although we expect the Fire Phone to receive plenty of media coverage, we do not anticipate any impact to Apple’s iPhone franchise,” wrote White in a research note issued Wednesday. “With a long history in computing, we believe Apple is unique in its ability to develop hardware, software and services that work together seamlessly.”
White noted that there was similar media buzz around Google’s (NASDAQ:GOOG) (NASDAQ:GOOGL) first entry into the smartphone market with the Nexus One in 2010, as well as the Moto X in 2013. However, both devices failed to impact Apple’s position in the market. Google eventually retreated from the smartphone market when it announced in January that it was selling Motorola Mobility to Chinese PC maker Lenovo. White pointed out that Apple has similarly been unaffected by other companies’ attempts to break into the tablet market. Both Google and Microsoft (NASDAQ:MSFT) failed to impact sales of Apple’s iPad with the Nexus 7 and the Surface, respectively. With only a 4.5 percent share of the tablet market in 2013, Amazon’s Kindle Fire has also failed to present a significant challenge to the iPad, said White.
White also pointed out that the upcoming iPhone models will make it even harder for Amazon to compete against Apple in the smartphone arena. Apple is rumored to be releasing the iPhone 6 in two larger screen sizes of 4.7 inches and 5.5 inches. Both devices are expected to drive a spike in upgrades for current iPhone owners, as well as attract a number of new users who may have been waiting for a larger-screen iPhone. Meanwhile, Apple’s distribution deal with China Mobile (NYSE:CHL) is continuing to fuel its growth overseas, White reports.
Finally, White noted that Apple remains focused on the high-end segment of the smartphone market, one that will not likely be affected by Amazon’s Fire Phone. “In our view, Apple’s focus on making ‘great products’ that work well together with a robust ecosystem (e.g., 1.2 million apps, 800 million iTunes accounts) is really what we believe consumers want,” concluded White. Cantor Fitzgerald maintained a “Buy” rating and a $111 price target on Apple shares.