Amazon is reportedly moving forward on the development of a long-rumored smartphone. The company is said to have discussed the project, internally code-named Project Aria, with hardware makers.
According to a report in TheInformation.com, Amazon held discussions with potential hardware partners about a year ago concerning China and several European countries.
TheInformation.com cites a confidential document "produced by a potential partner and two people" involved in the discussions. This apparently followed earlier talks about Latin America. The site says that the Project Aria smartphone is expected to be released later this year.
'Fraction' of iPhone 5S Cost
While smartphone markets outside the U.S. and Europe provide the greatest potential for growth, Amazon would need to address whether the content it provides in the U.S. is licensed for use around the world.
The device will have a 5-inch HD screen but will cost "a fraction" of the iPhone 5S, according to The Information. Reports last year said the first Amazon phone would feature 3D gesture tracking, a 13-megapixel camera and a Snapdragon 800 processor. The expectation is that such a smartphone would also use the same Amazon-customized version of the open-source Android operating system as the Kindle tablets do.
Avi Greengart, an analyst with industry research firm Current Analysis, pointed out that the "smartphone market is extremely challenging," and, if Amazon does enter it, the company will need to have clear competitive angles.
He noted that the Kindle tablet is "a premium hardware device basically sold at cost, and designed for Amazon's content." But a loss-leader approach for a phone would be different.
With a phone, Greengart said, "content is only one use case and not necessarily an important one." He also noted that, in the U.S. at least, carriers offering a phone at cost or below with a two-year contract is not uncommon.
But a price play "is easier to imagine than a couple of years ago," Greengart told us. Amazon could try to sell directly to the customer, as it does with its tablets, which could give it more control over pricing. He noted that Motorola tried selling directly, but said Amazon "has a much better retail operation" than Motorola did.
Additionally, he said "more people are buying 5-inch-and-up smartphones," and it's possible to make the case that content could be more important for large screen smartphones. Notwithstanding the territorial issue of licensing for its content, Amazon could look to emphasize its strength in content by focusing on large screen phones.
It could also focus on services, which are rapidly becoming a distinguishing brand feature of smartphones, such as services from Google and Nokia. Greengart said the retailer might offer special deals on some of its services with its smartphone, such as a free year of Amazon Prime.