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The fate of Amazon's new Fire Phone

The fate of Amazon's new Fire Phone Brennan Hayden
Amazon’s latest addition has generated considerable attention and time will tell if it's a successful product. However, there are a couple of parallel universes to consider as we watch things unfold.

The first is the little noticed Mozilla Firefox OS phone (similarity in names is admittedly poetic, but almost certainly unintentional), which is competing for the lowest of the low-ends in emerging markets. Mozilla announced that 750,000 Firefox OS phones were shipped within the first six months of release. Considering IDC’s projection of a 6x year-on-year growth for the OS and the 16 manufacturers churning them out, it looks like the Mozilla phone will outpace the 2-3 million devices that Amazon is predicted to sell in its first year. And like its eponymous Mozilla Firefox Browser, Firefox OS is open source.

Why should this phone platform matter to Amazon?  To understand that, you have to go back in time to a second parallel universe, the Mobile Virtual Network Operator “MVNO” craze of nearly ten years ago. Maybe you remember the ESPN Phone? The Disney Phone? 7-Eleven Speak Out? Helio? Back at the height of the cell phone craze, but before the iPhone and Android, several brands and VCs experimented with white-labeling the entire mobile phone experience -- all the way down to the consumer’s bill, customer service, the whole nine yards.

Before Steve Jobs succeeded in getting AT&T to let him control the user experience with the iPhone while using the AT&T branded network – an industry first – the MVNO was a brand’s answer to bypassing a stodgy phone company in hopes of using the cell phone to create and nurture brand loyalty. Virtually none of these branded MVNOs survived. The MVNO’s that do survive exist as cell phone brands, for very niche markets, and decidedly at the low end of the market, not as extensions of premier consumer brands. The sole exception is, interestingly, Kroger Wireless.

Why did they fail?  In short, it wasn’t possible to build the enterprise value investors needed when the means of core service delivery – the phone network -- was completely outside of the brand’s control. It was a fatal flaw to the business model.

What does all this mean for the Amazon Fire Phone? What Steve Jobs and Apple did with the first iPhone and more importantly the Appstore, was to commoditize the phone service and present the core value in the form of Apps, and by extension the phone OS. It is the phone OS that delivers the core value that consumers perceive in a smartphone and, consequently, their phone service. On this analysis, Amazon should almost certainly be worried about their OS. Although it’s based on the solid Android OS, it isn’t engineered in a way that allows seamless OS updates like a “real” Android phone. As even the only slightly geeky have learned, without regular OS updates to add functionality and keep up with newly discovered bugs and security vulnerabilities, phones and computers rapidly deteriorate to paper weight status. Judging by the pace of OS updates these days on smartphones and computers – remember that the minor ones count too – the highly likely fate of every Amazon phone is a degrading user experience well before the natural end-of-life of the device.

Contrast this situation with the likely fate of a phone built on the Firefox OS, which will have seamless access (should the supplier choose to provide them) to regular and timely OS updates. The open source nature of this platform makes it a potentially more customizable and stable option for a brand looking to create the immersive phone experience similar to what Amazon is doing with the Fire Phone. And are brands likely to pursue this approach? Well Disney seems to be at it again, with perhaps a better shot at a sustainable business model than their failed MVNO.  They will supply the phone, but not the accompanying network and customer service. Once again, they are using the Android iOS and will compromise on OS updates and app store access.

Mozilla could not be reached for comment on this article, but one has to wonder if they are watching the emerging branded phone experience with extreme interest, even while they focus on the low-end and emerging markets.

And what might Google be thinking about the Firefox OS? It seems, as expected, that they have the bases covered either way since they control the default search experience on the Firefox OS even if they (presumably) don’t control the OS itself.

Brennan Hayden is Vice President of Mobile for [x+1].  His responsibilities include new business and partnership development, strategic guidance, daily business operations and client relations. [x+1] Origin, the company’s programmatic...

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