Fire TV breaks Amazon’s mold of a device that undercuts rival gadgets on price to move consumers back to the company’s core e-commerce business. What's Amazon's ultimate plan?

While Amazon breathlessly touted the capabilities of its streaming-media box, Fire TV, this week, it surprisingly didn't mention anything about how the device would link up with the company's fundamental purpose: being the online store that sells everything to everyone.
Amazon has never concealed its playbook for its Kindle family of products: price your device so far below the competition's that consumers scoop it up and you open the floodgates to a steady stream of content sales. It's a Trojan horse: Build a shopping cart but present it like a sweet tablet. And like the classic Trojan horse, it needed to feel like a gift.
Fire TV, however, is no gift. It's priced at the high end of the market for such devices, lacks privileged Prime pricing to draw in new members, and falls short of its potential for integrated digital commerce. Amazon threw out the Kindle playbook, but it isn't showing off any new moves for Fire TV. That means Amazon's ultimate goal of turning the living room's centerpiece into a portal to its online everything store isn't here yet, and may not be for a while.
"There's a long game going on here: You get into the TV properly, and you're turning advertising on TV into a shopping cart in people's homes," said Dan Cryan, senior director of digital media at researcher IHS.

What Fire TV does

In its essentials, the $99 Fire TV is a streaming-media box quite like other streaming-media boxes. Like Roku, Apple's Apple TV, and Google's Chromecast, Fire TV connects your television to the Internet, which then connects you to cloud-based video or music services.


Fire TV does a few things differently, however. For one, Amazon built Fire TV with more-powerful guts than its competitors. Its processor and amount of RAM -- the memory that helps computers run smoothly -- top those of the $99 Roku 3 and the $99 Apple TV, so it can play videos instantaneously. It has several incremental features that others lack or can't match: parental controls, voice-command search, and most importantly, support for a decent gaming experience. Gaming is its biggest competitive advantage. Games are essentially absent from Chromecast and Apple TV and an afterthought on Roku. Fire TV, with an additional $40 controller, leans back on Android's universe to offer games like Minecraft Pocket Edition and Badland, as well what it promises to be a growing stable of games from its new in-house Amazon Game Studios. The games push expands a stream of revenue, with the selection of casual paid games averaging $1.85 apiece.
And Fire TV will be offering the same digital movie- and television-show purchases and rentals that it sells through Kindle Fire. Though you don't need a subscription to $99-a-year Prime, Amazon's membership service with free shipping and exclusive and original streaming video similar to Netflix, Fire TV works a lot better with it, since the interface heavily favors Amazon content.
Amazon spokeswoman Kinley Pearsall said all of Amazon's hardware products aim to make money when people use the devices, not when they buy the devices. "Fire TV follows the same approach," she said. "Our goal is to basically break even on hardware and build a product that our customers love, and the rest will take care of itself."