The document summarizes Amazon's failed attempt to enter the smartphone market with its Fire Phone in 2014. It provides an analysis of Amazon's strengths and weaknesses compared to the highly competitive smartphone industry. The Fire Phone failed because it did not offer any clear value or differentiation for customers at its higher price point compared to other smartphones. The document recommends that Amazon either focus its resources on other more profitable businesses instead of smartphones, or potentially partner with an existing smartphone manufacturer like Xiaomi to leverage their respective strengths and reduce risks of entering the smartphone market alone.

1. Amazon
What happened with the Fire Phone?
Donatienne Vanlandeghem – Lisa Troy – Darpan Argawal – Hami Usta

2. Agenda
• Introduction
• External analysis of the smartphone industry
• Amazon’s strenghts and weaknesses
• Why Amazon’s Fire Phone failed ?
• Recommendations

3. What is Amazon?
3 CORE BUSINESSES
« Our vision is to be
Earth’s most consumer
centric company »
107 $BN IN NET SALES
304 M ACTIVE CUSTOMER
ACCOUNTS
NUMBER 1 E-TAILER IN THE US

4. PEST Analysis
Privacy issues
Political
Artificial
Intelligence
Technology
Online
Communities
Social
Maturing Market
Economic

5. 5 forces of the Smartphone Industry
Rivalry
between
Competitors
Entry Barriers
Power of Buyers
Substitute Threat
Power of
Suppliers
High
High
High
Moderate
Low

6. Inbound Logistics
• Reduced returns
to suppliers due
to forecasting
abilities.
• C.R.M efficiency
allows for insight
on customers
experience
Outbound Logistics
• Global Partners
& Locations.
• Availability
order Bound
products
• Amazon Prime:
Fast & Free
Shipment
Marketing & Sales
• Discounts & price
reductions.
• E-commerce and
E-Marketing
through websites.
Services
• 30 days free
return policy
• Effective use of
C.R.M.S
• Use of
Marketplace to
increase channel
& range of
products
Operations
• Easy and Fast
payment system.
• On line
customer
contacts and
feedback centres
• Use of E.R.P.S
Company Infrastructure
 Vast amounts of data available of customer's world wide to deliver required & recommended products &
Strategies.
 Vast no. of orders worldwide with heavy investment leveraging over suppliers resulting in cost-reduction.
Human Resource Management
 Offers highly skilled work benefits.
 Strategic Placement of storage facilities leads to reduction of overhead costs.
Technology Development
 Renting computing resources to other companies reduces total cost of ownership.
 Standardize equipment's to digitalize media for on line download.
 Setting up new research labs
Procurement
 Use E-procurement for easier and faster communication with suppliers.
 “Fair Procurement” Policy adopted by Amazon.
 Warehouses & Distribution centres to avoid transaction cost of contracting out
Value
Added -
Cost =
Margin
Overview of Amazon’s Value Chain
SECONDARYACTIVITIES
PRIMARYACTIVITIES

7. Amazon’s Competitive Advantage
• Differentiator: Process (Logistics &
Operations)
• Cost Leadership – Product & Pricing
• Ecosystem with Dynamic Community
• Convenience
• Technological Capabilities

8. Key Resources & Capabilities
• Global partners & suppliers
• Brand Equity (Amazon)
• Employees
• Advanced R&D centres with Strong R&D team.
• Large Warehouses & fulfilment centres in different countries.
• Quality in customer support.
• Effective Market Strategy
• Total assets worth $170 billion (2015)
• Ability to integrate across functions.
• Easy & fast payment system

9. Flame out
of Fire
Phone
Customer
focus
Pricing
strategy
Repositioning
of the brand
No value for
customers
Differentiation
for higher price
From a
utilitarian to
a lifestyle
Why Amazon failed ?

10. Recommendations : two ways to go
Amazon credibility in this industry
has already been compromised
Focus ressources on more profitable
businesses and projects currently
being developped at Amazon
Huge investment lost
Shared risks and relatively low
probability of major losses
Speed to market
Creating a competitor in the US
market
Risk on the Amazon brand
Exit the smartphone industry Strategic alliance with smartphone
manufacturer

11. Xiaomi for a potential partnership
• Possibility to provide a top
smartphone at a very competitive
price : fit with Amazon brand image
• Xiaomi is consumer driven, just as
Amazon. This consumer focus was
what lacked in the Fire Phone.
• First step into the US and Western
market
• Power of the Amazon brand and
the Amazon ecosystem (TV; Kindle;
Prime)
Why for Amazon ? Why for Xiaomi ?

12. THANK YOU FOR LISTENING !
Q & A