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Increasingly-credible reports suggest Amazon could have its own smartphone on the market within a year. But analysts are divided on exactly what it would achieve.
It appears to be a case where several different rumors that might be circumstantial evidence on their own are coming together to make something more compelling. Bloomberg notes insiders claiming Amazon is working on production with Chinese smartphone manufacturer Foxconn.
Meanwhile Amazon is also said to have been in talks with several companies to buy up patents: not so much to gain technology, but rather as a defensive tool given the current legal lunacy in the smartphone market.
The Wall Street Journal goes as far to say Amazon has got parts suppliers testing a working model. It expects production later this year or in early 2012.
The most common theory is that an Amazon phone would be made and marketed using the same logic as the Kindle Fire tablet. Firstly, Amazon has a major advantage when it comes to selling devices direct to consumers. Secondly, it can afford to make little or no money from the sales if it’s then able to either take a cut on purchases made using the device, or sell premium services such as Amazon Prime.
There’s already speculation that the handset would be sold unlocked and without a network commitment, at the same $199 price point of the Fire. Assuming it’s a full-fledged smartphone, that would be a very attractive price tag.
It’s questionable whether the Fire business model would work as well on a smartphone. Paying for streaming video services wouldn’t be as attractive on a small screen. There’d also be the question of whether it’s in Amazon’s interests to leverage the Kindle brand: it’s risky enough having the Fire use a backlit screen rather then e-ink, but associating the Kindle name with reading apps on a tiny phone screen may be a step too far.
There’s also a theory that Amazon wants to find a way to make cash from people shopping in physical stores. Digital Trends’ Geoff Duncan suggests this could be done by taking existing apps that photograph barcodes and then produce price comparisons and putting these front and center on the handsets
The logic is that this will often encourage shoppers to order the goods they are examining online at a cheaper price — particularly with Amazon’s ever-dangerous 1-click feature.
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