The king of e-commerce appears ready to shift from selling companies' phones to selling its own, the latest in a widespread trend of tech companies branching out to grab a bigger slice of the consumer pie.
Recent reports say the world's biggest online retailer, which is already in the manufacturing business with its Kindle e-reader and Kindle Fire tablet, is at work on its first smartphone, made by Apple's contractor in China, Foxconn.
Building the Ecosystem
Bloomberg News, citing unnamed knowledgeable sources, said the company is patenting its own wireless technology to fend off any lawsuits from Apple, which has battered rival Samsung with accusations of infringement and recently succeeded in having the Galaxy Nexus smartphone and a Galaxy Tab model tablet banned, temporarily at least, in the U.S.
Our call to Amazon's media relations department on Friday requesting comment on the reports was not returned in time for publication.
A Kindle smartphone, most likely powered by Google's Android operating system (the Kindle has a customized Android platform), would follow in the footsteps of Google's attempt to market its own phone, the ill-fated Nexus One, which was a retail failure when the search giant tried to sell it online beginning in January 2010. Facebook is also said to have a smartphone planned.
But Amazon has the power of an existing, massive customer base, an established brand and experience from its Kindle sales working in its favor. A phone could be a huge cash cow for Amazon by deepening an ecosystem in which customers use Amazon devices to buy Amazon products, which now include apps, movies and music.
"For them it's a content play," wireless analyst Gerry Purdy of MobileTrax told us. "It's how much they can make through the device, not from the device. They've had great success with the Kindle Fire by putting value-added services right in front of the user, instead of embedding it and saying 'here's 3,000 apps, good luck.' I think they can do the same with a phone."
Low Price Point Seen
Because of that potential -- and the overwhelming competition in the smartphone arena -- Purdy estimates that an Amazon phone will likely sell for as much as $100 less than the average smartphone cost of $200. The Kindle Fire sells for just $199.
"It has been reported that the average Kindle Fire user acquires $125 in services in the first 12 months, which more than makes up for the device revenue," Purdy said.
But at the end of the day, an Amazon phone will still have to compete with the market king, Apple's iPhone and a range of ever-more-dazzling Android, Windows Phone and BlackBerry devices, which means it will have to have decent specs.
"You will have to compare it to the Galaxy S III, which is doing very well, and now that the Motorola Mobility acquisition has gone through you can expect in the next six months to see some really significant plays being made by Google," Purdy said. "You can't sell a worse phone and expect people will love it just because of the services. You need the cool factor."
Back in November, Citigroup analyst Mark Mahaney announced that, based on Asian supply checks, his company believed an Amazon phone would arrive in the second quarter of this year.
Posted: 2012-07-06 @ 11:02pm PT
Once Amazon has reskinned the Nexus 7" tablet to make the Kindle Bean, coming in time for your Xmas shopping, it will take no effort to redskin an Android 4.1 phone the same way (since the Android 4.1 OS works for both. Moreover the cloud and heterogeneous synch with PCs and Macs thru Chrome means that you never lose track of your wants.