Editor’s note: Ezra Gottheil is Principal Analyst for Technology Business Research.

HAMPTON, N.H. - Jeff Bezos put on a show with the interesting, apparently high-quality Fire phone, but TBR believes the Fire phone won’t greatly impact Amazon or the smartphone market. Innovative 3D-like display and tilt controls may work well and differentiate the phone from offerings from Apple or Android OEMs, or they may prove to be an annoyance and battery eaters. Even if successful, TBR believes they don’t radically improve the phone’s interface and won’t draw many buyers away from other vendors, especially in the now-mature U.S. smartphone market, which is Amazon’s initial target due to the United States having the largest install base of Kindle Fire devices and Amazon Prime subscriptions.

  • Amazon Prime customers will find the Fire phone attractive, but a lack of groundbreaking features limits its appeal outside Amazon’s ecosystem

The thorough integration with Amazon’s content ecosystem, especially its preferential pricing treatment for Amazon Prime customers using Amazon devices, will draw some buyers away from other platforms. Android smartphone vendors will be hurt more than those of Apple, as Apple owners are famously loyal to the company and its products. For Amazon, attracting Amazon Prime customers to its phone is not a strategic move, however. It doesn’t increase Prime membership, and it won’t significantly increase Prime loyalty; as Bezos said, “Amazon Prime customers stay Amazon Prime customers.”

For most potential customers who are not currently subscribers to Prime or owners of a Kindle or Kindle Fire, the Fire phone’s feature set is simply not compelling enough. In the mature North American smartphone market, most buyers have a smartphone and an investment in the smartphone’s ecosystem. TBR believes the Fire phone doesn’t offer enough to make most customers switch. The phone itself appears to be quite good, if the UI innovations work well, and the Mayday live help system will interest some buyers. Amazon has proved to be astute in making its devices family-friendly, and with smartphones doubling as child entertainment devices, that will drive some interest. Nevertheless, TBR believes the net effect of the Fire phone will be small for those not currently in the Amazon sphere of interest.

  • Amazon is missing an opportunity by not immediately bringing its Firefly app to Android and iOS

The Firefly app that makes it very easy to comparison shop with Amazon was impressive in demonstration, and will, for Fire phone buyers and Prime members, increase Amazon sales. The increase would be much greater, however, if Amazon had brought out the app on the iOS and Android platforms and promoted it aggressively to Prime members. TBR believes Amazon will eventually introduce Firefly on those platforms, but the company is neglecting its iOS and Android install base — a base with much greater potential to drive Amazon sales than those who will buy Fire phone when their smartphone contracts expire — in timing and promotion.