Posted : 2014-06-22 16:48
Updated : 2014-06-22 18:55

Amazon phone may pose threat to Samsung, LG

By Kim Yoo-chul

Amazon's Fire Phone
/ AP-Yonhap
Will Amazon's latest smartphone become a game changer?

Korea's two biggest smartphone vendors ― Samsung Electronics and LG Electronics ― see it as a potential threat, given its clear advantages in content, distribution and cloud computing.

The Korean tech giants are monitoring how the "Fire Phone" will affect the smartphone industry.

"The top appealing factor for the Amazon phone is competitive pricing and the technology that enables it to produce three-dimensional (3D) images," an industry official said.

"The mobile is customized for shoppers. Customers can shop more conveniently by using the Amazon content platform and Amazon will be able to earn more commissions."

He said the Fire Phone could possibly change the "rules of the game" as the mobile will be connected to tablets and Web-based TVs via alliances with leading mobile carriers.

More people are showing interest in the phone because it targets budget-conscious customers with a low off-contract price. It starts at $199 with a two-year contract through AT&T, a top-tier carrier in the United States.

"Another differentiating factor is that the phone can realize tight integration with other Amazon devices like cloud storage," said Jae-min, 36, a software engineer in Seoul.

"For me, the issue is how to use today's mobile commerce with a budget phone. Smartphones don't need to be expensive as content is more important than hardware itself."

Amazon is expected to expand its territories in smartphones in Europe and emerging countries, where the company's distribution channels are much stronger and influential than in North America.

Bernstein Research said in a note to clients that Amazon planned to offer cheaper smartphones through partnerships that would help bring Firefox mobile platform-embedded phones to people who could not afford high-end phones.

"Smartphones using the Firefox platform should help gain traction in emerging markets, the idea basically being to seek out the 'next billion internet users' by engaging cost-sensitive first-time smartphone buyers in places like Indonesia and India," it said.

As the smartphone industry is shifting its focus from fancy hardware specifications toward content, Samsung and LG Electronics are expected to seek more deals in content sourcing.

Over the last few years, the two Korean smartphone producers have been consistent in releasing an expanded line-up of devices, as Korean makers had the advantages of output commitment, better pricing and on-time delivery.

But Samsung Securities analyst Cho Sung-eun pointed out that Samsung and LG should think "what's next" in smartphones as hardware specification was no longer a differentiating factor.

"With promoting three caterpillars ― distribution, content and cloud ― the emergence of the Amazon phone will threaten the Korean companies," Cho said.

"If you underestimate the effects of the Amazon mobile, it will be a mistake."

He said Amazon would be expanding its business partners in countries other than the United States.

Samsung recently decided to invest $7 million to purchase Boxfish to provide more content.

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