Oyster to compete with Amazon

Moving beyond e-book subscriptions, startup Oyster will now sell digital titles outright in a bid to rival Amazon.Oyster

Oyster, a subscription service for e-books that launched a year and a half ago, is expanding into online retail with an e-book store set to spar with Amazon's.

Until Wednesday, Oyster only sold consumers a subscription book service for $9.95 a month. But with questions remaining over the popularity and viability of e-book lending services, Oyster is expanding into selling individual books, with hopes of attracting new customers to its service.

Oyster says its efforts come at an auspicious time. In the past year, book publishers have begun setting prices evenly across the e-book market. With similar pricing, customers will choose their store based on something else, like the look and feel of a service and its easy of use.

"You'll have to compete on other things like discovery and design," said Oyster CEO Eric Stromberg, who added that titles on his company's store will often cost between $9.99 and $14.99 apiece, similar to Amazon, Apple and other digital book sellers.

The question now is whether Oyster can make a dent in Amazon, a veritable juggernaut in the e-book industry, estimated to lord over more than half the US e-book market and even more abroad. Both companies represent an inevitable future for books that are not printed on paper but downloaded over the Internet to singular devices like Amazon's Kindle e-reader or Apple's iPad tablet. The question is how we get there, and which company will ultimately be the one selling to us.

Though Oyster users can read on a variety of the devices from smartphones to tablets, the one gadget left out may be the most important: Amazon's Kindle e-reader.Oyster

That's still unclear. Unlike with music and television, Oyster's e-book subscription model, which which was somewhat novel when it launched, has done little to supplant traditional book sales, mostly because binge-reading is harder to do. Binge-watching an entire season of Netflix's political drama "House of Cards" in a single weekend, on the other hand, is much easier.

Yet Oyster did make early headway within the book industry by signing up three of the five biggest US publishers, amassing a library of more than 1 million titles. Yet even these publishers have chosen to wait as long as six months to release their newest titles on subscription services like Oyster. There's another hitch: Oyster users can only access the service through an app for smartphones, tablets and computers -- but not Amazon's popular Kindle e-reader. (Oyster does have an app for the Kindle Fire tablet, though).

That wasn't enough to convince customers, though, who are flocking to other subscription services like Netflix and Spotify, but are shy to sign up with the equivalent for books. Even Amazon, which last year launched its own subscription service called Kindle Unlimited, has declined to discuss how well its service is performing. The subscription model has also garnered the disdain of some of publishing's biggest names.

"'Eat everything you can' isn't a reader's mindset," Penguin Random House's CEO Tom Weldon said at the UK's Futurebook conference last November. "In music or film you might want 10,000 songs or films, but I don't think you want 10,000 books." Hachette CEO Arnaud Nourry was more blunt, calling an e-book subscription service an "absurd" and "flawed" idea catering to an "infinitesimal minority" of people who read more than two books a month.

With its e-book store, Oyster has been able to set agreements with a majority of the traditional book industry and may grow into a larger threat, one Amazon may start paying closer attention to. Oyster will still continue to expand its subscription service as well, which it plans to offer at the same price after its e-book store opens.

Wasn't possible a year ago

Prior to a year ago, Oyster would have had a much harder time offering an e-book store. Why? Because Amazon used to have much more negotiating power over e-book pricing.

Because Amazon controls, by some estimates, around a third of the US book market and more than half of all e-book sales, publishers can rarely afford to ignore the platform. Amazon also had the law on its side.

Publishers went so far as to violate antitrust laws in dealings with Apple's iBooks store starting in 2010, and Amazon's victory in the antitrust case that followed sparked a turning point for e-book pricing that end up solidifying its business model.

But a bitter six-month dispute last year over e-book pricing with French publisher Hachette upset the market, and effectively led to publishers having more power to set their own prices. That means Amazon won't be able to use its financial might to reduce prices below what Oyster and other competitors can afford.

Even with these changes, Oyster still faces an uphill battle. Its service doesn't run on Amazon's popular Kindle, and the company doesn't offer its own e-reading alternative. Anyone hoping to read Oyster books must own a smartphone, tablet or computer, and read from the same screens they use to respond to email and watch cat videos on the Internet.

There's also public libraries, most of which offer e-book borrowing for free. Even in the age of the e-book, lending still beats buying.

Surprise! Amazon opens online marketplace on rival Alibaba's Tmall

Amazon CEO Jeff Bezos is now paying Alibaba to attract Chinese consumers.James Martin/CNET

E-commerce giant Amazon has, at least for the time being, decided that joining them is sometimes better than trying to beat them.

This week the company opened its own digital storefront on rival Alibaba's Tmall, an online marketplace for consumers in China, which hosts merchant's storefronts and lets Alibaba take a cut of sales.

The marriage between Amazon and Alibaba is, to put it mildly, an odd one. Alibaba is China's largest e-commerce company. And after going public in the US last year -- in an historic IPO that saw it raise $25 billion -- it has set its sights on e-commerce in the US, where companies like Amazon and eBay dominate. Meanwhile, Amazon has been trying for years to be a major presence in the Chinese market, where it's been able to capture only a small share.

Tmall is a key ingredient in Alibaba's China success. It provides digital storefronts to major retailers around the world and has been a commercial gateway to a growing Chinese middle class. Several prominent US companies, including Apple and Nike, have storefronts on Tmall. In the vast majority of cases, individual companies use Tmall to sell their own products directly to Chinese consumers; Amazon's portal to access goods from a wide range of companies is uncommon.

By opening a storefront on Tmall, Amazon finds itself in the unfamiliar position of having to pay another e-commerce company to sell products. The decision reflects how tough it can be to break into the Chinese market and attract consumers. Government regulations have historically safeguarded China-based companies, making it difficult for foreign firms to gain a foothold without at least partnering with a Chinese company. For instance, in the video game market, the only way for console makers to sell their hardware to Chinese consumers is to team up with a China-based business.

Alibaba has made clear that it wants to expand its presence in the US -- a market that's been more welcoming of foreign companies than China has. In January, Alibaba announced a new service -- which uses its digital-payment platform Alipay -- that's designed to make it much easier for US companies to sell directly to Chinese consumers.

The service, called Alipay ePass, enables a China-based customer to make a purchase on a US merchant's own US-based site. The customer pays through AliPay, which handles the transaction and converts the Chinese currency to the dollar and pays the US retailer. The retailer then ships the product to an Alipay facility in the states, which handles the logistics of getting the product to the customer in China.

Though some have cautioned that the move is part of a broader effort on Alibaba's part to eat Amazon's lunch, the Chinese company has shied away from comparisons to Amazon, saying that unlike its US-based counterpart, it doesn't actually sell its own products. Instead, Alibaba provides a portal for other companies to sell their wares.

Alibaba founder and CEO Jack Ma has been loath to draw too close a comparison to Amazon. Last year he said he wants to expand his business in the US but sees Amazon as a potential partner rather than a competitor.

"We are coming here not to compete," Ma said. "We're coming here to help a lot of small businesses, which I think a lot of things may need to be done. It's not a competition [with Amazon]."

An Alibaba spokeswoman echoed that sentiment in a statement on Friday, telling CNET that Amazon's decision to come to Tmall is welcome.

"Tmall has been a committed leader in providing quality products and services to consumers, and we continuously seek out partners who share the same passion," the spokeswoman said. "We welcome Amazon to the Alibaba ecosystem, and their presence will further broaden the selection of products and elevate the shopping experience for Chinese consumers on Tmall."

Amazon did not respond to a request for comment.

The company's Tmall storefront features a relatively small number of departments, including food, shoes and kitchen items. Amazon's own e-commerce site includes far more departments, ranging from video games to electronics to furniture to just about everything else.

Amazon Appstore nears 400K apps on 'huge progress'

From CNET

Amazon's Fire tablet line includes plenty of must-have apps, but is still missing a few others.CNET

BARCELONA -- Amazon has had a tough time getting its mobile-apps store noticed against bigger storefronts from Google and Apple. But it's making some headway in changing that.

A spokesman for the e-commerce giant told CNET this week that the Amazon Appstore has reached nearly 400,000 apps worldwide, up from its last reported figure of 300,000 in the fall and roughly double that of a year ago.

"To me, it's all about making sure we have all the right selection. We've made huge progress on that," Mike George, Amazon's vice president of apps and games, said in an interview here Tuesday duringMobile World Congress.

However, the 4-year-old Amazon Appstore -- which is largely designed for the company's Fire tabletsand Fire Phone smartphones -- remains well behind the Google Play store and Apple's App Store, each of which has over 1.2 million apps. Also, while it has increased its selection, Amazon's store still lacks some of the biggest titles from those other stores, such as Google's maps and email apps, and Supercell's Clash of Clans game.

Having a strong app store is critical for Amazon's device sales, since some customers will be turned off about buying its devices if they are missing sought-after apps or aren't regularly updated with new ones. But with two major players getting much of the attention, Amazon has struggled to get developers interested in making apps for its platform.

Mike George, Amazon's vice president of apps and games, said the number of Appstore apps has roughly doubled in a year.Ben Fox Rubin/CNET

Amazon has pushed to address that issue, with the company working closely with many app and game developers to bolster the store's catalog and bring to it the most popular apps. George said the Appstore catalog roughly doubled in the past year thanks to the popularity of Amazon's virtual currency, Amazon Coins, which provides discounts for app purchases, as well as the Fire Phone, which didn't sell well when introduced last year but still spurred app submissions from developers.

Moving forward, George said, Amazon will work to keep building up the catalog and focus on making apps more affordable, thanks to Amazon Coins and its free daily app program.

"I'm not chasing a particular number," he said about the store's total app count. "I'm just making sure we have all the apps that our customers want to use. And we have many of them and we're still working on everybody else."

A big plus Amazon has enjoyed from the Appstore is that once people start using it, they often become repeat customers, since Amazon users are accustomed to spending their money on the company's services and products, and already submitted their credit card information to its main website.

To grow its base, the company now needs to get its Appstore preinstalled on more devices that Amazon doesn't make itself, said Jack Kent, a mobile analyst for IHS.

"Trying to do it itself, it's going to be challenging," Kent said. "Having partners, it will have a better chance."

Brian Blau, a Gartner analyst, said that if Amazon can make its phone a bigger draw for consumers, its app store will benefit hugely.

But regarding catching up to Apple or Google, Blau added, Amazon has a long way to go."If they can solve that problem, their app store will rise above the others," he said, referring to the other smaller stores, such as Microsoft's Windows Phone and the BlackBerry World app stores.

Although the Appstore is still smaller than Google or Apple's stores, it fits well with Amazon's broad philosophy of trying to offer cheaper services to customers and making products and services independently -- even at the risk of failing -- so it can control and develop them, as well as draw customers into its ecosystem of offerings.

"We have patience and we take a long view of all these things that we're doing, and we really do start with our customers," George said. "And if we don't get it the first time, we keep iterating and inventing until we do."

In addition, he said, the company has launched the Appstore in more countries -- reaching 236 -- along with adding features to it and getting it preloaded on more devices.

"We're not slowing down," George said.

Amazon surprises investors with a gift of profit

One of Amazon's fulfillment centers on the eve of Cyber Monday.James Martin/CNET

Looks like Amazon got its happy holidays after all.

The company on Thursday reported a profit of $214 million, or 45 cents a share, on revenue of $29.33 billion, exceeding some analysts' estimates of 17 cents a share on $29.68 billion in revenue.

The results show that Amazon learned from the mistakes it made last year when its delivery partners FedEx and UPS ended up with a backlog of packages that caused some shipments to arrive at customers' doorsteps after Christmas. This year, the world's largest online retailer revised its delivery plans and even extended its Christmas delivery cutoff date, getting packages to customers on time, said Scot Wingo, CEO of ChannelAdvisor, which provides analytics and other services to online retailers.

For the current quarter, the company said it expects sales to rise to between $20.9 billion and $22.9 billion, growing 6 percent to 16 percent compared with the first quarter last year. It also forecast that operating income would range from a loss of $450 million to a profit of $50 million. Amazon last year reported $146 million in operating income.

Last quarter's profit comes after two consecutive quarters of losses, and investors are buying into the results. Shares surged more than 13 percent in after-hours trading. The stock closed at $311.78, up $7.87, or more than 2 percent.

"They did a really good job of extending the holidays and not repeating the debacle of last year," Wingo said.

Like other retailers, Amazon sees a spike in activity during the season, with big shopping days likeBlack Friday and, in more recent years, Cyber Monday, driving orders.

The holidays also tend to bump up the company's Prime membership, as people take advantage of the program's free, two-day shipping for last-minute shopping. The company in March hiked the price of Prime membership to $99, up from $79.

"When we raised the price of Prime membership last year, we were confident that customers would continue to find it the best bargain in the history of shopping," Amazon CEO Jeff Bezos said in a statement. "The data is in and customers agree -- on a base of tens of millions, worldwide paid membership grew 53 percent last year -- 50 percent in the U.S. and even a bit faster outside the U.S.

Amazon did not release specific numbers for Prime. Wingo estimated that Prime membership has grown to roughly 40 million.

Prime is a key component of Amazon's strategy. A subscription service that gives members access to e-books, videos and music in addition to two-day shipping, it keeps customer -- and their dollars -- inside Amazon's vast ecosystem. One study of 2014's fourth quarter found that Prime customers spend hundreds more on Amazon than non-Prime shoppers.

"When a customer becomes a Prime member, they do step up their purchases very considerably," Chief Financial Officer Tom Szkutak said during a call with journalists following the report. He would not say how much more Prime members spend or whether they're watching more streaming videos than other consumers. Amazon has heavily invested in its Prime Instant Video service, which Szkutak said is driving more consumers to Prime.

The real star of Amazon's earnings continues to be its cloud-computing arm, Amazon Web Services. The company said that 1 million people use the service now and that it will start breaking out the service's financials this year, an indication of AWS' growth. Amazon has expanded the service considerably since it launched in 2006. It is a major provider of data storage and computing for several consumer brands, including video-streaming service Netflix, and even government entities like the CIA and NASA.

In the past, AWS sales were included in a miscellaneous category for North America sales called "Other," which saw $1.67 billion in sales in the last quarter.

Amazon to open first physical store

Amazon's past experiments with physical locations included large storage lockers, but this is the first time the company is committing to an actual storefront.James Martin/CNET

Amazon will open a physical store location in New York, just in time for the holiday shopping season, The Wall Street Journal reported Thursday.

The site, which will be located across from the Empire State Building, will serve as a warehouse and storefront for the e-commerce giant, unnamed sources told the Journal, which referred to the store as an "experiment." The store would allow customers to order an item online in the morning and pick it up at the store in the evening. The location will also process returns and exchanges.

Amazon did not confirm or deny the report.

"We have made no announcements about a location in Manhattan," Amazon spokeswoman Kelly Cheeseman told CNET.

The store lets Amazon move even deeper into the brick-and-mortar retail industry's market. The Seattle-based company has long trumped retailers in shipping speed and service, but it has yet to try running a physical store. And though online sales are increasing steadily, most retail transactions still take place in physical stores. By the end of this year, 6.5 percent of sales will come from online shoppers, and 1.2 percent will come from people shopping on mobile devices, according to eMarketer.

Having a physical location and delivery options like same-day pickup was one of the key advantages stores had over Amazon. The new location will also give Amazon a chance to show off its hardware line, which now includes e-readers, tablets, the Fire TV set-top box and the Fire Phone.

The company has toyed with physical locations before, opening pop-up shops and mall kiosks for its e-readers and tablets, and placing huge metal lockers in various locations for package pickup.

Amazon Fire Phone: Was $200, now just 99 cents

The Amazon Fire Phone with a two-year contract now costs less than a candy bar.James Martin/CNET

The Amazon Fire Phone can now be had for less than a buck.

The e-commerce giant said Monday it's now offering the 32-gigabyte version of its first smartphone, which went on sale just two months ago, for 99 cents with a two-year contract, down from $200. One year of Amazon's Prime service is still included as a short-term promotion. A year of Prime, which offers free two-day shipping and streaming music and video libraries, usually costs $99.

Amazon also slashed the price of its 64GB Fire Phone to $100 with a two-year contract, down from $300.

The new pricing for the Fire Phone, offered exclusively through AT&T in the US, suggests soft sales for the device, but could give the smartphone a much-needed shot in the arm, as the device faces tough competition from Samsung, Apple and others. A study last month suggested that Amazon wasn't selling all that many Fire Phones, although the company hasn't disclosed sales figures.

The change should also allay concerns that the phone wasn't priced competitively enough to gain notice against other major tech players. Amazon made waves in the tablet computer market by offering its lower-priced Kindle line, so the $200 price tag on the Fire Phone came as a bit of a surprise to some consumers and industry watchers.

Also Monday, the Fire Phone became available for preorder in the UK and Germany.

The Fire Phone, with a 4.7-inch display, provides two features not found in other smartphones. It offers something Amazon calls Dynamic Perspective, which provides a 3D effect on the phone by using four front-facing cameras that track eye movement. Firefly is another key feature, which uses the rear camera to identify products and bar codes, providing details about over 70 million products and making them readily available for sale through Amazon.

The e-retailer has been investing heavily in an effort to expand rapidly, despite the strategy hurting its quarterly results. In addition to the Fire Phone, the company this year also came out with a new set-top box for streaming videos called Fire TV, as it works to expand its presence with consumers beyond its main website.

Amazon Fire Phone: Was $200, now just 99 cents

The Amazon Fire Phone with a two-year contract now costs less than a candy bar.James Martin/CNET

The Amazon Fire Phone can now be had for less than a buck.

The e-commerce giant said Monday it's now offering the 32-gigabyte version of its first smartphone, which went on sale just two months ago, for 99 cents with a two-year contract, down from $200. One year of Amazon's Prime service is still included as a short-term promotion. A year of Prime, which offers free two-day shipping and streaming music and video libraries, usually costs $99.

Amazon also slashed the price of its 64GB Fire Phone to $100 with a two-year contract, down from $300.

The new pricing for the Fire Phone, offered exclusively through AT&T in the US, suggests soft sales for the device, but could give the smartphone a much-needed shot in the arm, as the device faces tough competition from Samsung, Apple and others. A study last month suggested that Amazon wasn't selling all that many Fire Phones, although the company hasn't disclosed sales figures.

The change should also allay concerns that the phone wasn't priced competitively enough to gain notice against other major tech players. Amazon made waves in the tablet computer market by offering its lower-priced Kindle line, so the $200 price tag on the Fire Phone came as a bit of a surprise to some consumers and industry watchers.

Also Monday, the Fire Phone became available for preorder in the UK and Germany.

The Fire Phone, with a 4.7-inch display, provides two features not found in other smartphones. It offers something Amazon calls Dynamic Perspective, which provides a 3D effect on the phone by using four front-facing cameras that track eye movement. Firefly is another key feature, which uses the rear camera to identify products and bar codes, providing details about over 70 million products and making them readily available for sale through Amazon.

The e-retailer has been investing heavily in an effort to expand rapidly, despite the strategy hurting its quarterly results. In addition to the Fire Phone, the company this year also came out with a new set-top box for streaming videos called Fire TV, as it works to expand its presence with consumers beyond its main website.

Amazon to buy live-stream gaming site Twitch for $970M

• by Donna Tam 
   @DonnaYTam
 

Amazon CEO Jeff Bezos is taking the gaming market more seriously with the largest acquisition in the e-commerce company's history. James Martin/CNET

Amazon, in its efforts to increase its video-streaming offerings, plans to buy live-streaming video game site Twitch for about $970 million in cash, the two companies announced Monday.

The deal, the largest cash buy in the e-tailer's history, helps Amazon expand its video-streaming service, as it pits its fledgling Amazon Prime Instant Video streaming service against streaming giant Netflix. CEO Jeff Bezos has made it clear that it is committed to growing its video offerings, includingthe development of original content.

Twitch is a video platform that streams content geared toward gamers, including live gaming footage, commentary, and online shows. The company said Monday it counts more than 1.1 million unique broadcasters per month, up from 600,000 in November last year. Their videos are reaching more than 55 million gamers, up from 45 million before. On average, Twitch said, users watch 106 minutes per day.

"Broadcasting and watching gameplay is a global phenomenon," Bezos said in a statement. "Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month -- from The International, to breaking the world record for Mario, to gaming conferences like E3."

Gaming is not an area where Amazon has made a lot of progress. Although it launched its Amazon Game Studios two years ago, it has sparse offerings. But, the retailer clearly wants a piece of the video game market. When it unveiled its media-streaming device Fire TV in April, it also rolled out an optional controller for video game play.

Twitch, launched in June 2011 by Justin.tv co-founders Justin Kan and Emmett Shear, made headlines this year for the live streams of a crowdsourced game of Pokemon and goldfish playing classic video games. Videos on the site can also be streamed on Microsoft Xbox and PlayStation 4 game consoles. In the last year, one of Twitch's biggest catalysts for growth was its inclusion in the two devices.

"Amazon and Twitch optimize for our customers first and are both believers in the future of gaming," Shear said in a statement. "Being part of Amazon will let us do even more for our community. We will be able to create tools and services faster than we could have independently. This change will mean great things for our community, and will let us bring Twitch to even more people around the world."

Google was reportedly in talks to buy the streaming site earlier this year. The acquisition would have expanded the scope of YouTube's video ambitions. Neither company commented on the reports at the time.

The deal ultimately fell through, an unnamed source told Recode, and Amazon stepped in to pursue the streaming site. Details of Amazon's purchase were first reported by The Information and the Wall Street Journal.

Amazon's Fire Phone could fuel $2 billion in sales

by Donna Tam

Amazon CEO Jeff Bezos holds up the Amazon Fire Phone.James Martin/CNET

Amber Corbin of Broken Bow, Neb., is a loyal Amazon Prime customer who has been a fan of the company's devices since the very first Kindle e-reader in 2007. She's bought hundreds of e-books, raves about Prime's two-day shipping, and owns several versions of the Kindle Fire tablet.

And now she's got her eye on the Fire Phone. One of 300 people selected by Amazon to attend the Fire Phone launch event in Seattle on Wednesday, Corbin gushed, "It is amazing. I got to play with it today and it is just unbelievable."

Many of the tech gadget-obsessed may be scratching their heads over why Amazon is even entering the smartphone business, which Samsung and Apple dominate. They're likely puzzled as to why Amazon CEO Jeff Bezos chose to release a feature-packed phone -- it's got six cameras and supports 3-D images and maps -- at a starting price ($199) that's comparable to that of Apple's popular iPhone and Samsung's Galaxy smartphones. After all, Amazon's standard approach has been to unveil budget-friendly gadgets, as it did when it began selling Kindle e-readers and tablets.

And there's the question of why Amazon is selling the phone exclusively through AT&T, a move that limits the number of people to whom Bezos can even sell the Fire Phone.

But Corbin doesn't have any questions -- or reservations. Her contract with US Cellular is up at the end of the month and she said she's ready to make the switch from her Galaxy S4 if AT&T can provide service in Broken Bow, a city of about 4,000 people. Her reason: She loves Amazon's products and the convenience they offer when it comes to buying things through the e-commerce site.

"I just kept upgrading, and I absolutely love each and every one that came out," she said in an interview Wednesday, after having her photo snapped with Bezos at the smartphone's launch. "I am already in love."

Bezos is banking that many of the over 20 million customers who pay $99 a year for Prime today will think just like Corbin does. Some of those Amazon shoppers already buy at the site through one of the company's devices, which are all designed to make it easier for people to shop and consume content.

The Fire Phone could help Amazon could generate about $2 billion from e-commerce products alone -- that's not including what it will make from content like streaming videos, music or e-books -- predicts Neal Doshi, an analyst with CRT Capital Group. That could grow to $5 billion or $7 billion in the next couple of years, he said.

It's a small chunk of change for Amazon, which had sales of $19.74 billion just last quarter. But it could boost mobile revenue, which accounted for about half of sales during the 2013 holiday season.

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The key to Amazon's smartphone sales may be Firefly, the Fire Phone's built-in object recognition technology. It allows the phone to automatically identify items and then shows the product for sale on Amazon. The phone's audio recognition technology does the same for music and video content. Those products and content are then just a click away from purchase.

Firefly checks the price of more than 70 million products, according to Amazon's site.

"People who use this phone are going to be Prime users, and they are going to use this Firefly feature like crazy," Doshi said.

Firefly stole the show at the launch, with Bezos using the phone to correctly identify items. "It's the most sophisticated implementation I've ever seen on any device," said Patrick Moorhead, principal analyst at Moor Insights & Strategy.

Convincing users that it's worth the price will be a major challenge for the Fire Phone, which goes head to head with popular phones from Apple and Samsung. The Fire Phone will be available in two versions from AT&T starting July 25, and it will include a free year of Prime service. Current Prime customers who buy the phone will get a year added to their Prime service, Amazon said.He suspects that Amazon delivered a higher-quality and therefore higher-priced device to improve its hardware brand. "I think that Amazon recognizes that their brand is looking more like a Walmart than a higher brand like Macy's," Moorhead said.

That's where Prime customers like Corbin come in. She was selected from 60,000 people -- including journalists and developers -- who applied for the chance to attend the product unveiling. In her application, she told Amazon about how many Kindle devices she owns and how Prime gives her quick access to goods she just can't buy locally in her small community, where she works for the local chamber of commerce. The bookworm already carries her Kindle Fire HDX everywhere, so why not a Fire Phone?

Said Corbin: "$199 is a very reasonable price for a phone with that kind of technology."