Amazon enters smartphone market with Fire phone

Amazon has unveiled its highly anticipated entry into the smartphone market, a handset called Fire.

The phone, announced by CEO Jeff Bezos at an event in Seattle, has a 4.7-inch screen and quad-core processor.

It also has a rear 13-megapixel camera with optical image stabilization to reduce the effects of camera shake for clearer and sharper photos. Most phones attempt to do this through software but Amazon's phone has a hardware component that physically moves the imaging hardware. This latter method is generally superior to software-based methods.

Amazon is offering free image backup and storage through its cloud service with the phone, Bezos said.

A key feature of the phone, at least for Amazon, is an application called "Firefly," which provides an important tie-in to the company's online retail business by recognizing movies, TV shows, music and books, as well as objects, and allowing users to place recognized items into their Amazon cart for purchase. It finds products through their barcodes or photos of the labels and can identify songs when snippets of the music are played, for instance.

Another feature is "dynamic perspective" that appears to give depth to certain images and produces a quasi 3D effect. Bezos demonstrated the function by showing a picture of the Empire State Building on the phone.

Fire also comes with Amazon's "Mayday," a service offered on the Kindle tablet that puts a customer service representative on-screen to answer questions. Bezos said the service will be available at no cost 24 hours a day and calls will be answered within 15 seconds.

The phone will be available in the U.S. through AT&T on contract. A version with 32GB of memory will cost $200 and a 64GB version will cost $300.

By picking AT&T, Amazon has chosen a familiar partner. The company already handles wireless delivery of e-books to Kindle readers and Amazon promotes AT&T 4G service to users of its Kindle Fire tablets.

Amazon's entry into the crowded smartphone space could increase competition if consumers buy into its vision. Unlike other phone makers, Amazon has a compelling service to offer alongside its hardware in the shape of the Amazon Prime music, e-book and video service.

However, success is not certain. Facebook attempted to get in on the market in early 2013 with a customized handset from Taiwan's HTC called the HTC First. The phone was a flop and just a few months later carrier AT&T was offering it at a discount.

Founded 20 years ago, Amazon has grown from an online seller of books into one of the world's largest e-commerce sites. It also sells its own e-book and tablet hardware, has become a publisher of electronic books and is a major supplier of cloud computing capacity. In the last few years, it has been building up its Prime annual subscription service adding video streaming, e-books and, most recently, streaming music.