Jeff Bezos announces Amazon's new phone at an event hosted by Amazon at Fremont Studios in Seattle's Fremont neighborhood on Wednesday, June 18, 2018. Photo by Mike Kane for Bloomberg

San Francisco and New York - packed its new Fire Phone with features such as an image-recognition tool so people can quickly purchase items from its online store. Jeff Bezos may need more than that to get customers to pay up for the handset.

Amazon’s chief executive introduced the web retailer’s first foray into smartphones, with 3-D viewing, audio- and image-recognition technology, as well as features such as unlimited storage for photos and a year of free membership to its Prime fast-shipping programme. The Fire Phone, which will be available on July 25 with AT&T as the exclusive wireless carrier, would start at $199 (R2 145), the company said on Wednesday.

Yet that may not be enough for the device to overcome a challenging market dominated by Apple and Samsung Electronics, with most of the growth coming from low-cost phone makers in countries like China. While Fire Phone gives Amazon a way to put its web store and other services directly in front of consumers, the gadget will only be available on AT&T’s network and, at $199 with a two-year contract, costs the same as Apple’s iPhone and Samsung’s Galaxy.

It also will not be immediately available internationally, where Amazon’s suite of services are not as robust.

“It’s interesting, it’s newsworthy, but I didn’t see something… that we didn’t know was possible three or four years ago,” Julie Ask, an analyst at Forrester Research, said. “It’s going to be an uphill battle for Amazon.”

The Fire Phone’s introduction continues Amazon’s evolution from online bookseller to global technology titan with its hands in a growing number of businesses. The online retailer has debuted a variety of consumer electronics devices, including e-readers, tablets and TV set-top boxes, as a way to propagate its online store and digital services with customers.

Success on mobile is also essential because people are moving more of their digital lives to smartphones and away from traditional personal computers (PC). Use of Amazon on PCs in the US fell to 42 percent last month from 55 percent in March last year, according to an Enders Analysis survey. Engagement through smartphones was flat at 32 percent.

At an event yesterday in Seattle to unveil Fire Phone, Bezos was undeterred. He said he had been asked for years when Amazon would have a phone, and waited until the company could roll out something unique.

Amazon’s stock is down 16 percent this year, compared with a 5.9 percent gain in the Standard & Poor’s 500 index.

The opportunity for Amazon remains a large one, especially if the company can get away from having its app as just one among hundreds of thousands on Apple and Google’s app stores, and put its services at the centre of the Fire Phone.

According to researcher IDC, the number of smartphone users worldwide is quickly approaching 2 billion. The devices generated sales of $338.2 billion last year, up 21 percent from 2012.

“There’s a place for it,” Oliver Wintermantel at International Strategy & Investment Group in New York said. “The [Fire Phone] will serve to fulfil one thing and that’s having people spend more time and money on Amazon.”

Like other Amazon hardware products, the company is selling the device at near cost and aims to make money when people use it to buy other items using the gadget, according to Ian Freed, the vice-president of Fire Phone. Customers could expect more hardware from Amazon, he said. “We’re not going to stop with this phone.”

Companies willing to spend heavily are not assured success in the smartphone market. Apple and Samsung are the only companies profiting in the global smartphone market, according to Canaccord Genuity Equity Research. – Bloomberg