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Summary:

According to a report, Amazon wants to get into the smartphone market so badly it might offer its phones for free.

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Rumors of a smartphone from Amazon are nothing new. They have been floating around since before the inception of the original Kindle Fire. But a new report from Amir Efrati and Jessica E. Lessin (formerly of the Wall Street Journal) suggests that not only is Amazon working on a smartphone, but that it might offer it for free.

Yes, free. And not just free with a carrier subsidy. According to the report, “Amazon wants the device to be free whether or not people sign up for a new wireless plan at the same time.” Of course, Amazon wouldn’t just give its phones away if it expected nothing in return.

It is unclear, for instance, if Amazon will require customers to sign up for a subscription-based service like Amazon Prime. But this would make the most sense to me. In fact, this strategy actually sounds a lot like how wireless carriers work when you think about it. Carriers aren’t making much money off of device sales – they would never subsidize the price of phones so greatly if that were the case. Instead, carriers make money by requiring you to pay for their service every month. The same could hold true for Amazon if it requires customers to sign up for Prime, or some other completely new service, in order to use its otherwise-free phone.

And aside from the revenue generated by some sort of subscription-based service, offering its phone for free would allow Amazon to gain some else that’s just as valuable: marketshare. Apple and Samsung have proven to have quite a lot of control over the smartphone market, so it is possible that Amazon could attempt something drastic in order to shake things up.

An Amazon phone will likely be running a “forked” version of Google’s Android operating system, much like the Kindle Fire tablets do. This means that a phone will use the open-source Android OS as the basis of its system, but it won’t won’t incorporate any of Google’s own apps or services. This would allow Amazon to include its own existing app store, and nurture the development of its own app ecosystem, which could mean another large stream of revenue.

amazon-appstore-featured

But considering it takes around $200 to produce a smartphone on average, Amazon will have to think long and hard before deciding to go all-in with such an aggressive plan. Or it can take a page out of Xiaomi’s playbook, also mentioned in the report. The Chinese smartphone manufacturer is essentially selling its phones at cost in an effort to undercut it competitors, and plans to recoup the difference through software and services.

Most recently, Amazon has been said to have been working on two different smartphones, including one with a glasses-free 3D display, along with a lower-end model. It is unclear if these devices are still in the works, and if they are the ones being referred to in this report. Either way, it’ll be interesting to see Amazon enter the smartphone space, no matter the device and strategy.

  1. more likely would be the phone is not free but the lowest level of service is offered for free like with freedompop. or perhaps amazon will produce a wifi only phone that is free to use but only works on wifi.

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  2. Sorry, I bought into the Kindle Fire… a cheaply-made piece of hardware sold at a very low price with an old Android version which really was only/best solely suited for shopping on Amazon or reading over-priced Kindle books. The crappy hardware eventually stopped working about a year into it because the USB port broke and I could not charge it… out of warranty and no recourse… a problem reported by “millions” of other Kindle Fire users and which Amazon almost totally ignored. Never again Amazon… you burnt me once, shame on me!

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    1. Why do you only buy ebooks? Your public library probably has plenty of digital material you can download for free? My origninal Kindle Fire has limits for sure, but costs about a quarter as much as an iPad mini. It plays more stuff than I have time to use, and a couple of inexpensive and free games keep my grandchildren occupied in the car. Nor do I see cheaper download prices from B&N, Kobo, or Sony. I will admit that I have read plenty of complaints about the usb port, but mine seems fine.

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  3. maybe Amazon could also go with Jolla’s Sailfish; this would free it completely from Android while leaving them the possibility to tweak Alien Dalvik to only allow access to their own app store…

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  4. If Amazon is working on a free smartphone, that will be a great idea.

    http://www.techgreet.com/

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  5. So this will be how Apple gets disrupted. I can’t wait to watch.

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    1. The difference will be that Apples work…

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  6. Google tried to sell a free Nexus smartphone funded by ads, but the carriers said no.

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