Computers

Rumors about an Amazon smartphone may be true

CORRESPONDENTJuly 15, 2012 

No one could ever accuse Jeff Bezos of a lack of vision. Amazon’s CEO, seeing daylight in the area of online book sales, built up a huge catalog and the distribution system that plugged into it. Then he turned Amazon from bookseller to online purveyor of everything from computer peripherals to motorcycle parts. He took ebooks from obscure market niche to major player in publishing with the Kindle and challenged the iPad with his own Kindle Fire. He’s even in outer space, developing an orbital spacecraft with NASA backing for his company Blue Origin.

Rumors have flown before about Amazon developing a smartphone, but I think we should take them seriously. The latest rumor, strengthened by a Bloomberg report that Amazon is working with Chinese producer Foxconn to build the device, makes a lot of sense. It would be typical Bezos, for it would follow through on ideas visible in the Kindle ecosystem and would extend the company’s reach from your desktop PC to the phone in your purse or on your belt.

Consider the soon-to-be-upgraded Kindle Fire. Working with the Kindle has taught Amazon the hardware business at the same time that it opened up an easier sales channel for the company’s many customers. The Kindle Fire is a tablet running the Android operating system, but you can think of it first and foremost as a content delivery package designed to move products from Amazon to you. Amazon sells books, music and movies, all easily available in the Fire’s customized interface and satisfying the need to acquire the latest content instantly.

Price could be disruptive

Having your content available across your devices is a goal that everyone from Apple to Microsoft is keenly aware of, which is why Microsoft is working so hard to make Windows 8 into the ultimate cross-platform interface. Bezos knows this as well as anyone and surely wants to feed the Amazon content stream into an always-present device that makes impulse purchases a foregone conclusion. Don’t forget, too, that Amazon has been selling phones from other manufacturers for years, and has data galore on customer use and preferences to work with.

Adding weight to the smartphone rumors is the recent purchase of UpNext, a 3-D mapping app that would only make sense for a device with GPS capabilities. The current Kindle Fire lacks GPS, so we could just be looking at a harbinger of further capabilities for its next version. But buying a mapping service meshes so neatly with the smartphone idea that I can’t believe Bezos would overlook it. Then factor in the possibility of a heavily subsidized smartphone supported by all that Amazon content and you could be looking at a phone with a disruptively low price.

Content stream key

Developing the Kindle Fire has also given Amazon experience in the app business, and it will be interesting to see if Android, the presumptive operating system of choice for a smartphone from the company, can be tweaked to produce a phone with the features it would take to compete head to head with the iPhone and all the other Android phones on the market. Market analyst Gartner thinks 467 million smartphones will be sold in 2012, making this a dicey move if it happens, but playing for big stakes is something Bezos has demonstrated he can do.

Meanwhile, keep your eye on the tablet space. The new Kindle Fire had better be good given the release of Google’s Nexus tablet and the same rumor mill that worked on Amazon’s smartphones continues to talk about an iPad that will challenge the small-screen tablet market. If Amazon’s smartphone becomes a reality, it will need continued success from the Fire, because the idea is to get consumers into a content stream that flows from any of their devices. Build the right tools and the seduction of a single supplier becomes irresistible, driving sales on both ends. That, at least, must be Amazon’s hope, but we’ll know for sure before the summer is over.

Paul A. Gilster is the author of several books on technology. Reach him at gilster@mindspring.com.

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