Kindle Smartphone Mock Up
Here’s an interesting thought — will Amazon release a smartphone the way it has released a tablet?
In the grand scheme of things, Amazon’s Kindle and subsequent Kindle Fire will likely pay off well for the company. It makes sense to sell them with only a small profit margin, at-cost, or even at a loss because the content will make up the difference. Amazon is betting that people will have the same opinion as this guy I met at a party: “I used to download all sorts of [pirated] stuff like music and movies. Now that I got a Kindle, I’m trying to go legit, though.” With the Kindle Fire being $199, that has to be pretty close to a breaking even cost.
Amazon probably doesn’t want to focus on hardware or even the OS on these things. They’re simply a medium for people to access and buy things from Amazon. Case-in-point, the Fire only makes sense in comparison to a Nook Tablet only if you have a Prime account and don’t have Netflix. (The Prime Instant Streaming is available on the Fire but Netflix looks subpar (unlike on the Nook).) The Fire, however, is a great way to encourage users to consume additional digital media above and beyond books or magazines. Buying or renting anything from its movie and TV show library is a big part of it — this will compete with Apple’s iTunes Store as well as with Netflix current service (though I always imagined it would buy Netflix). It’s also got the Amazon MP3 Store which gives out free promotions for a song or album every few months and comes with Amazon’s Cloud Storage, which brings us to another important aspect. Device capacity is rather low so storing purchases on the cloud also becomes increasingly important.
The catch here is that the Fire does not come with an option for cellular/mobile broadband. I’ve always thought that was unnecessary but if you’re on the go all the time, there’s some merit to being the guy with the 64 GB iPod with your entire music collection on there … or having a data plan to access it. Given that a lot of tablets are used at home, Wi-Fi is ubiquitous. While traveling becomes trickier.
This is where the Amazon Phone comes in. Creating a customized user experience by way of a skinned Android OS and controlling content would offer Amazon another avenue to sell content to users. Consider if they integrated a top-notch bar code scanning app into a prominent place on the phone — any time you picked up any item in a store you could scan it and buy on Amazon for potentially cheaper (or through its Marketplace) or instantly download a movie/song to your Amazon Cloud. This brings brick-and-mortar stores one step closer to obsolescence.
Another interesting thought from the rumor mill: Amazon gives away a free Kindle/Fire/Smartphone to Prime users. Once you have the hardware, you’ll just be itching to get content … from Amazon.
