We've been hearing rumours about Amazon developing its own smartphone for years. Now, a new report from Wall Street Journal vets Jessica Lessin and Amir Efrati not only says the launch is imminent but also claims it will have a very consumer-friendly price tag: $0.
A free smartphone! Sounds pretty awesome, right? But let's keep Amazon's business plan in mind. The company works hard to keep its devices priced as low as possible with expectation that it will make money off the company's seemingly limitless library of goods and services. Lessin and Efrati suggest that the phone could require membership in Amazon Prime and, citing an unnamed source, say it could be free regardless of whether the consumer signs up for wireless service.
Now the fun part is to try and figure out who would build the free-dollar-phone for Amazon. Chinese manufacturers like Huawei, ZTE and Xiaomi are all capable of building low cost phones ($100 to $300), but anything less than that would eat into Amazon's already ultra slim profit margins. But again, this is nothing new to the company that already loses money on every Kindle Fire sold. All that said, Lessin and Efrati report that the "free strategy isn't set in stone and depends on several factors, including Amazon's ability to work out financial arrangements with hardware partners."
One thing is for sure. This report must make the hardware teams at Apple, Google and Microsoft pretty nervous. The smartphone business has become viciously competitive, particularly in the emerging market for "budget" phones where everybody's hungry for a piece of the action. So it could damn difficult to convince someone to pay $200 for an iPhone or a Moto X (plus however much the contract costs) when they could just cruise over to Amazon.com and get one for free. [Jessica Lessin]