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Summary:

Amazon’s press event could bring more than a new tablet and e-reader: A smartphone may be shown as well. It makes sense because consumers don’t just buy products, they buy ecosystems. And Amazon has one that it can extend to the small screen of a smartphone.

Amazon Appstore for Android, mobile apps, app store
photo: Amazon

At a press event on Thursday, Amazon is widely expected to launch both an updated Kindle Fire tablet as well as a new e-ink reader. Those may only prepare the stage for an Amazon smartphone, however. Sources tell The Verge that Amazon will show off a smartphone of its own that follows the same strategy as the Kindle Fire: Use Google’s Android platform as a software base and build your own interface to sell goods on it.

Amazon Kindle Fire gamesAlleged details are slim, but what has surfaced makes sense: Android 4.0 and Nokia Maps for location services. At this point Amazon can’t use Google Maps if it builds atop its own custom Android build, so Nokia’s mapping solution is a perfect fit. The only way Amazon could use Google Maps is if it also used Google’s other software, such as Gmail, Google+, YouTube, etc… It didn’t do so on the Kindle Fire, so it didn’t have to pay Google for those apps and Android itself is free to use.

Moving into smartphones may not appear a good idea on the surface. After all, the competition is fierce. But having a smartphone of its own puts Amazon’s services directly on all four screens: Connected televisions, computers, tablets and, if the rumor is true, handsets. Each screen is tied together by both a user’s Amazon account and Amazon’s Whispersync technology, making it easy to view content across all four screens.

If Amazon does launch a phone, my gut says it will take an approach similar to what Google tried with the original Nexus One: Sell GSM phones direct and allow customers to pick their own service and SIM cards. And I’d also bet that in keeping with Amazon’s tradition of reasonable pricing, any such smartphone will be sold at an attractive price point, even at or just below Amazon’s cost.

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  1. Amazon may launch a phone, Facebook may launch a phone, maybe Walmart will launch a phone!

  2. I just can’t see Amazon doing a decent phone, they would certainly need to do some massive improvements to their current hacky version of Android.

  3. This will be a huge hit. I have bought every iPhone after iPhone went 3G, and every Google phone. I have also bought Android phones and tablets from Samsung and HTC. And every Kindle made to date (except the large klunky one). If this is real, it would kill the Google/Samsung/HTC offerings and be a real threat to the iPhone. Why? First of all, I agree that Amazon’s user interface (on the Fire at least) is a bit klunky and nowhere near as nice as either ICS or the iPhone 4. But it is still pretty good and extremely usable – in any case it is not so inferior that I would avoid buying (or using given that I have the choice every day!) the Fire versus another Android tablet. But, the killer here is content – as Apple has always always understood. iTunes makes the iPhone, no matter what PR and Apple junkies may claim. iPhone hardware – and its ballyhood UI – are nothing special and don’t hold a candle to Android.. but its successful because of iTunes. period. Google’s Play music and movies are a joke. Amazon has what only Apple can offer – vast content. And the integrated user experience across multiple devices (every DVD player, TV, etc. has Amazon now) without having to “sync” is worth its weight in GOLD once you get used to relying on the cloud. I hope its true. Go Bezos!

    1. Well said. And digital content sales have a MUCH higher profit margin than actual hardware; if Amazon can get direct user information from a smartphone (preferences, sites, apps used) it could target digital content and physical goods more effectively.

      1. Is this true?
        I’m thinking of Apple’s enormous profits off hardware.
        Samsung’s profits on smartphones are larger than anyone’s digital content sales for mobile devices, far as I know.

        1. Right off the bat, 30% of digital app sales trumps most hardware profit margins, no? Apple’s hardware profit margins are certainly healthy, of course, but haven’t we seen evidence that some of its peers are going with device pricing at or below cost? And if not, their margins are thin. Think Kindle Fire, Nexus 7, Galaxy Nexus, etc….

          I haven’t seen a breakdown of Samsung’s mobile phone profits; i.e.: hardware vs. content, so I can’t say anything about that revenue mix.

      2. In this space (hardware and content), Amazon and Apple have applied the classic business model that once made Gillette and Polaroid dominant. Despite Samsung’s success with the S3, that model looks to be a winning formula going forward. The only other player that matches A&A is Google and that is because, as you said Kevin, “digital sales” (which includes ads) “have a MUCH higher profit margin than actual hardware” (in this way, Google might be analogous to Kodak during its period of dominance). It is going to be really tough for Microsoft and Nokia to compete which in turn means not as much innovation — not a good thing for the consumer. As for Facebook, unless it can create a phone on a platform that is more than just a hardware sale the company would be foolish to divert resources that are better applied to generating digital sales.

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