If the latest reports are true, Amazon's smartphone ambitions make even less sense
Amazon's smartphone is becoming increasingly nonsensical. The company's motivation for entering an already-crowded market was unclear when all we knew about the device was that it would feature a dizzying number of cameras and a gesture-based interface. Now that we know the company is thinking of subsidizing the data plans used by the device, according to a new report from BGR, any benefits Amazon will reap from its ambitions are even murkier.
The company is said to be planning an "Amazon Prime Data" plan that would see it paying for some of the data its customers use with its smartphone. (The plan's details are unknown -- BGR says that the name of the plan is known, but the specifics are highly classified.) If the plan works as expected, Amazon could be spending even more money to popularize a product from which it's unlikely to draw any direct profits, given its history of selling hardware at cost.
It's hard to imagine why Amazon is developing a smartphone in the first place. Its services and marketplaces are already available on basically every major platform. It offers products like the Kindle line and the Amazon Fire TV to serve other functions and expand beyond competitors' platforms. Amazon is more ubiquitous even than other anywhere-and-everywhere companies like Netflix. The company doesn't need to release its own smartphone to take advantage of mobile's rise.
Perhaps it's just feeling left out. Everyone from Google and Microsoft to Apple and Samsung has developed its own platform, replete with software marketplaces and physical products. As Pando's James Robinson explained when the smartphone was revealed earlier this month:
Jeff Bezos and Amazon’s strategic genius so far has been in entering Amazon into new consumer verticals, lowering its price and waiting out competitors. As a smartphone manufacturer coming up against Apple and Samsung, who between them have over two-thirds of the market sewn up, its strengths are comparatively meeker. Amazon is a giant of commerce, but as a device manufacturer, it is just one of the pack.
Amazon may see something in the market we don’t. Its apparent incorporation of 3D technology suggests that it thinks it can improve the experience. But just maybe, it has made a smartphone because it can. The walled garden it seems to aspire to, creating an Apple-like dominion of devices through which it can sell us things, limits the company. The power of Amazon’s innovation in changing how we shop comes in its pervasiveness. Paying for the data its customers use on a device from which it draws no profits and is unlikely to ever see a return on its investment, even if it intends to use the device to advertise its digital marketplaces, makes little sense. Amazon might know what it's doing, but that seems less and less likely, at least when it comes to extending its business model to phones.
Not that losing money has ever bothered Amazon before -- the company is ready to play the long game. The question is if the long game in the smartphone market will reward a newcomer with little hardware experience for its patience, or if it will spit Amazon out just like it's spit out essentially every company not named Apple, Google, or Samsung.
[illustration by Brad Jonas for Pando]