Is Amazon building a smartphone? I don't know, but if they're not they definitely should be!
Why? Because Amazon is one of the few companies that has a credible shot at being a major player in mobile, and even if it's going to be tough, the stakes are so high that in many ways it'd be riskier for them to sit on the sidelines. The companies that dominate the smartphone and tablet markets are going to define computing for the next ten to fifteen years -- and make an insane amount of money doing it. At the very least Amazon, which has the number one e-commerce platform, cannot afford to let someone else use their dominance in mobile as a lever through which to displace Amazon's current position.
Wresting marketshare away from the likes of Apple and Samsung won't be easy, but Amazon, which has already seen some decent initial success with its Kindle Fire tablet, at least has the engineering chops, cloud infrastructure, e-commerce platform, and app and content ecosystem to be a contender (which is more than you can say for even some companies that already make smartphones). Plus it's important to remember that the mobile market is still relatively fluid. Think about the companies and platforms that dominated smartphones just a few years ago: Nokia, Symbian, RIM, Palm, Windows Mobile, etc. All of those are either gone, or are struggling mightily for survival, and largely have been replaced by a new set of players.
It's not inconceivable that in a few years the deck will have shuffled once again, with a several other companies and platforms on top. (Certainly in 2006 no one would have predicted that in 2012 everyone would be chasing Apple and Google.) I'm not dumb enough to predict the demise of either iOS or Android, but it wouldn't be at all inconceivable that five or six years from now we look back on 2012 as the highwater mark for either platform. The point is that in tech conditions can change quickly.
Of course, just because the market is fluid doesn't automatically mean Amazon will be able to take advantage of it and successfully launch a phone, but I'd argue they have more to lose from not entering the market than from trying and failing. It'll require them to be creative and I'm still collecting together my thoughts on what they might do to make a dent. Hopefully I'll be able to get something up soon, but in the meantime I'd love to hear what everyone thinks.
I am sure they have plenty of money to take this risk, and I personally would be interested to see what they could do, even if it fails.
I would argue that such a device would lead to the downfall of Amazon, as it would be a massive distraction. Even the Kindle, and Kindle Fire, are not telco devices. Whispernet is the antithesis of telco, seamless, no charge, and subscription free. A phone would be a massive shift, requiring telco contracts, etc. Yes, Amazon sells mobile phones today, but being a reseller is light years from being a device maker.
Speculation is fun, maybe they should build a TV. Or a car.
I don't see any reason why it would risk the downfall of the company. Amazon clearly has the resources to do this, and has been able to branch out into stuff like AWS without it risking their focus on commerce.
And as far as them doing a TV, they will probably do some sort of Apple TV/Roku competitor.
I do agree with you that if they are going to do things the old way it probably won't work. They're going to need to leverage their strengths to do something new. What makes this interesting is that they do have lots of assets to bring to bear here.
There are reasons beyond "because they can" for companies like google to build a smartphone platform; they already have a lot of your data, you already use services they have that are useful for a smartphone (gmail, docs, etc.). With Apple, they mattered because they had the hardware engineering and design chops to make a smartphone useable. Is Amazon's smartphone going to make it super easy to spend money on stuff or what?
I don't want to seem negative (because as a phone aficionado, I'd want to know what it would look like also)... but I just don't see the market responding to an 'Amazon phone'.
To me, unless there is some *extremely compelling* unique financial tie-in with their service or some subsidy, there's no point. Again, we're enthusiasts, so the general populous may love it. I just don't see them offering anything enticing except at the very low end of the market.
There are various other aspects floating around this that are worth considering:
- Will they make an acquisition of a hardware company to bolster their position? HTC could be a possible candidate. It's becoming increasingly clear that (with the exception of Samsung) it is becoming very difficult to be a pure-play hardware firm.
- To pick up on Devron's point below. What will their USP be? Price? Data plans? Price is the likely one given that it is their M.O. in general. And they have flirted with advertising supported hardware so it could be very interesting if they incorporate a native ad serving platform to further drive down the price.
- I haven't spent much time with the Kindle Fire but my impressions are that it is almost entirely a content consumption devices whereas smartphones are productivity devices and even to some extent content creation devices (photos, videos) and this means Amazon will have to build and manage apps/services that they've had limited experience with in the past - again, if they apply some fresh thinking here the results could be interesting.
Windows Phone has (from a UI/UX) point of view has shown that there's still plenty of ground left uncovered (even if their approach hasn't met with much commercial success) and the iOS and Android paradigms are likely to disrupted at some point in the not too distant future.
We should never forget that the customer for phones is the carrier, not the end-user. And I don't see how Amazon is going to be able to get a phone through carrier testing without pre-loading a bunch of apps and delays to updates. And like every other phone out there, people are going to demand the latest update all day long.
Sure they'll make a little bit of money, but this is just the next version of Dell. Getting cheap stuff to people who only want it because it's cheap, not because it's a good product. The idea of the Kindle Fire is far better than the actual product (for someone who owns a smartphone). For kids and non techie people, Amazon will likely make a lot of money, which is actually bad for the industry.
Think about it. If everyone's buying the cheapest thing they can get their hands on: Think of it as tho people are buying the Wii instead of the PS3 and you'll understand. Everybody is stuck on price instead of experience, versatility and functionality. People won't push the boundaries of tablets, they'll simply make a crap product and put all the money into marketing. We've seen this before with laptops not innovating until the 23rd iteration of the MBA.
If Amazon is smart they will beat Apple to the education wholesalers and make a 10 inch version of the kindle for textbooks. The kindle is awesome and should easily replace most physical books, but the form factor isn't right. Many high end schools are going to iPad because of the versatility and form factor. It's an easy win in my book.
There's also no logic to your argument that cheaper products make it difficult for others to build and sell premium products. Apple is prima facie evidence that you can build a very successful electronics business by offering premium products at a higher price even while the rest of the market races to the bottom.
I also think lots of people buying the Wii over the PS3 was not at all a bad thing. It just showed that coming up with an affordable and different take on gaming was the best way to expand the universe of people who play games.
It's about the experience, not the price and simply having a player in the game. Steve Jobs, the best salesman of this generation has taught us that. Amazon is happy to make a sub par device in a race to the bottom, which is good for people who want cheap stuff. The thing your missing is that until those people see someone using an "elitist" device they don't know what they could actually be doing and instead build a collection of "me too" crapware. Saying I have a Kindle, Kindle Fire, HP/Dell craptop, etc is nice, but it's more better to speak of what you have done with those products, not simply accumulating them for a low price, hoping you'll like whatever it is they can do.
The Wii had by far the best marketing out of all the game consoles, in a time before most people had HDTVs and those who did rarely saw HD content. Sony and Microsoft were ahead of the curve, developing quality experiences with the best graphics while Nintendo was perfectly happy to "sprint" for a little while, make a few great Mario and other 1st party games before ultimately sitting back and just counting cash. Evidence of Nintendo's superior marketing is in nursing homes everywhere. Seniors playing video games certainly is astonishing, but outside of bowling, those seniors have no desire to play anything else, which is sad. That's the situation where everyone loses, when the people who have the most power, the most cash, stop innovating and/or spend money on things no one wants.
Us techies, should be elitist from time to time, because otherwise you just have a collection of gadgets that all basically do the same things. Knowing when to buy, sell and re-purpose our devices is kinda the point behind why I come to this website.
PS I like being able to put things in bold, Thank you for that!