Amazon Smartphone Speculation Snowballs

New details about a possible forthcoming smartphone from Amazon continue to surface. The Internet retailer’s testing a smartphone right now and may begin mass production late this year or early in 2013, The Wall Street Journal reported. The phone could have a screen measuring between four and five inches.

The putative Amazon smartphone could use a Texas Instruments OMAP 4 ARM processor, PC World suggested. It’s likely to run a modified version of the Android operating system. Pricing may be around the US$200 mark.

However, “this isn’t about specs; it’s about creating a differentiated experience that consumers want,” Carl Howe, a vice president at the Yankee Group, told TechNewsWorld. “It could literally be a ‘preferred Amazon shopper’ phone and succeed if Amazon made that part of the experience central to their design.”

Amazon, like many other companies, “is trying to do the Apple thing,” Maribel Lopez, principal analyst at Lopez Research, remarked. “They think Apple have the whole integrated thing down. Amazon could be thinking they have the content, they have the store, how hard could it be?”

Why an Amazon Smartphone Might Make Sense

“Amazon has a great, strong brand, people know about it, people like it, and it’s known for having what you want,” Ramon Llamas, a senior analyst at IDC, told TechNewsWorld. “Also, it has loads of digital content.”

Further, Amazon “is one of the very few vendors that started out in services and moved into hardware,” Llamas continued. “That’s not a trivial step to take, as Google and Microsoft are finding out. Amazon’s a company that came out and introduced e-readers, and made a healthy amount of money from that. It then updated the e-reader with the Kindle Fire, which did very well, if only for one season.”

Arguments Against an Amazon Smartphone

However, Amazon “hasn’t shown that it can build a device that competes in the mobile phone category where two very powerful leaders, Google and Apple, are already well entrenched,” Howe said. “Amazon will have to offer more than price and media to convince consumers to buy its product.”

The smartphone market is tough, and “phone manufacturers are barely making money making phones,” Lopez told TechNewsWorld. “Just OEMing a phone from someone else and putting your user interface on it isn’t different enough from anyone else.”

Further, smartphones are “very experiential — you need to touch them, to feel them, to hold them up to your head, and to see if you can get all the applications,” Llamas contended.

Then, there’s the question of getting a new smartphone approved. “Any phone would have to be certified by the FCC, and that process takes anywhere from three to six months,” the Yankee Group’s Howe pointed out.

Also, the question of how a smartphone vendor will work with the carriers is “really huge — you have to work with them to get certified, get on their network, and decide if you’re going to sell through them too,” IDC’s Llamas remarked. Selling through carriers is “a distribution model different from Amazon’s.”

Songs of Innocence and of Experience

Amazon might be trying to create a unified user experience by offering users both a tablet and a smartphone like Apple does, Lopez suggested. If users want to move on to someone else’s content “they can get a transaction fee out of it. That’s what this is all about.”

Given Amazon’s core competency of a highly efficient discovery and shopping customer experience, “I would be very surprised if they did not do some sort of integrated tie in to their Amazon store as well as mobile payments,” Francis Sideco, a senior principal analyst at IHS iSuppli, told TechNewsWorld.

Amazon’s Kindle app is already available across multiple smartphones,” IDC’s Llamas said. “How do you move people from that experience to an experience on the smartphone?”

It’s not clear what unique experience Amazon will create, or what its business model is, the Yankee Group’s Howe said. “That’s why I’m not optimistic about its chances against other entrenched competitors.”

It’s likely that Amazon might launch a new smartphone in 2013 rather than later this year because “if we haven’t seen it in FCC certification yet, it’s unlikely to hit before October,” the Yankee Group’s Howe remarked. “And most carrier plans are pretty well-established for the holiday season.”

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