Reported by
former Wall Street Journal reporter Jessica Lessin and reporter Amir
Efrati this week, Amazon is currently working on a new smartphone that
could end up being completely free to consumers. Different than the majority of smartphone contract
deals, Amazon doesn’t want to require the user to sign up for a two-year
contract. Likely similar to the design of the Amazon Kindle HD tablet line, the
Amazon smartphone software would route all movie, television, music,
book and magazine purchases through Amazon similar to Google Play on Android
and iTunes on the Apple iPhone.
Hypothetically,
Amazon could also require users to purchase a yearly subscription
to Amazon Prime before getting access to the free smartphone. That would
also be beneficial to the smartphone owner as Amazon Prime includes access to
free streaming video on Amazon Instant Video as well as a free book rental each
month through the Kindle Lending Library. It’s also likely that Amazon would
send users into the same application store that’s available on the Amazon
Kindle Fire tablets in order to purchase and download premium third party
applications.
Amazon’s
ability to pull off this type of aggressive move to enter the smartphone market
will require agreements with hardware suppliers as well as partnerships with
the main mobile carriers to provide wireless access on the Amazon smartphone.
If Amazon is successful with this plan, the company could steal a significant
amount of market share from smartphone manufacturers like Samsung and Apple.
Conversely, if
Amazon enters the market with a $200 smartphone under a two-year contract,
there’s very little incentive for smartphone users to switch from their current
phone to a new smartphone that’s tied to Amazon’s content ecosystem. For
example, someone that’s invested hundreds of dollars in App Store content on
the iPhone simply isn’t going to switch over for the same deal with Amazon.
In addition to
taking a percent of revenue on third party applications sold through an Amazon
mobile application store, the retail giant could also make up the cost on
each Amazon smartphone by displaying digital advertisements. Similar to
Kindle devices with Special Offers, Amazon could constantly display
advertisements on the phone upon start-up unless the user paid an additional
fee to remove the ads.
Regarding the
software, the Amazon smartphone would utilize the same open-source version
of Android OS used to power the Kindle Fire tablets. This custom version of the
Android software doesn’t offer access to any of the traditional Google
applications, thus Amazon would have to expand its collection of core
applications to accommodate smartphone users.
While Amazon
has reportedly been working on a new smartphone ever since
the release of the first Kindle Fire tablet, there’s no indication that the
Amazon smartphone will be announced or released this year. When contacted about
this report, an Amazon representative declined to comment to Lessin. However
Amazon is expected to announce new Kindle Fire HD models this year, likely
occurring within the next 45 days in order to release the new models prior to
the start of the 2013 holiday shopping season.
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