Amazon stopped being ‘just a retailer’, as Steve Ballmer famously put it when they launched the first generation of the Kindle e-book reader in November 2007. Now the company want to revolutionise the smartphone business, by creating a debut smartphone which is completely free for the customer
Its been no secret that Amazon have had a smartphone in their sights for some time now. However, Amir Efrati and the former WSJ reporter Jessica Lessin have both reported this afternoon that the e-commerce giants intend to launch a free smartphone for consumers. Both reporters are citing anonymous sources who are apparently close to the subject and who are in on the retailers plans.
The smartphone will be sold via Amazon.com, allowing Amazon to capitalise on their huge global reach. The exact terms are as yet unclear, with some reports indicating that the smartphone will be aligned with Amazon prime membership.
For Amazon, the tactic of loss-leading on hardware in order to make the money back through online sales and online ads is a well trodden path. Their Android powered Kindle Fire was sold at a heavily discounted price, as Amazon knew they would make back the loss-lead on eBook sales alone. The smartphone business is hugely competitive, with a constant stream of releases coming over the current quarter, not least the iPhone 5S which is due September 10th. The Amazon smartphone is further out than this year, most likely launching 2014, but either way Amazon recognises the need to differentiate themselves in a hugely crowded market.
This strategy is hardly likely to blow UK consumers away, as smartphones typically come free on longer contracts. This differs in the US, where consumers are used to paying larger upfront contacts in order to then pay a lower monthly fee.
If their tablet is anything to go by, its likely that Amazon would pitch their smartphone at the mid-tier. This would position the smartphone against the likes of HTC, the Nexus range, BlackBerry and a number of Samsung models. The anticipated iPhone 5C will also attack this market from September onwards.
Whether this will be enough for an Amazon smartphone to sell well is anybody’s guess at this point. However Amazon would certainly shake the market up. Would you buy an Amazon smartphone? share your thoughts in the comments below.