Amazon phone!?


Amazon is rumored as extending its reach into the mobile market. Bloomberg reported that Amazon is working on a phone rumored to run on Google’s Android OS, along with Foxconn, manufacturer of Apple’s iPhone.  Further Amazon is supposed to be seeking patent acquisitions to complement its entry into the smartphone market and defend itself from patent trolls. 

Amazon has positioned itself to enter the smartphone market with its entry into the tablet foray with Kindle Fire. Kindle Fire has become the second best selling tablet after the iPad (based on speculated sales numbers of the Amazon Kindle tablet). With Amazon prime, cloud and app store, Amazon is more than ready to enter the phone business. One would expect Amazon to follow its aggressive Kindle pricing on its new smart phone as well. With other major brands like Samsung, HTC, Motorola dominating the low price point phone market, it would be hard for Amazon to gain a market share there. It may, however, try to score in the higher price point space – iPhone’s arena, but, in my opinion, Amazon lacks the expensive brand value that Apple portrays. 

Amazon could bundle 4G data services with the phone. Some analysts suggest that Amazon might charge $249 for the handset bundled with six months of 4G LTE data. The ultimate game plan that we all know Amazon will go after is to sell its  phone at an extraordinarily low price and blow through its inventory by bundling free two day shipping (Amazon Prime), beat Netflix at its own game (again Amazon Prime!), sell apps (via Amazon App Store) and its other software services. 

I dont think Amazon phone is a viable option to the Apple iPhone, but it definitely would be strong enough to fight the low price market segment. Selling the device at little or no margin is most probably the path Amazon will follow, but I would be excited to watch Amazon approach an entirely different model. 


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