Amazon (NASDAQ:AMZN) is gearing up for an absolutely goliath holiday season. The National Retail Federation is predicting that online retail sales this holiday will grow 15% over the same period in 2010, when holiday sales online came to a whopping $36.4 billion. Considering that Amazon accounts for 20% of all online retail visits, the company should have a very green Christmas indeed. Leading the charge this year is Amazon’s new $200 tablet, the Kindle Fire. Amazon is expected to sell 5 million Kindle Fires before the year is out, cutting into Apple‘s (NASDAQ:AAPL) lucrative iPad market.
Exciting stuff, but for Amazon, the 2011 holiday season is already old news, and the company instead has its cross-hairs settled over Apple for Christmas 2012. Of course, Amazon also will be gunning for Microsoft (NASDAQ:MSFT), Research in Motion (NASDAQ:RIMM), Nokia (NYSE:NOK), Samsung (PINK:SSNLF) and scads of other companies.
That’s right: Amazon’s making a smartphone.
At least, that’s what Citigroup analysts Mark Mahaney and Kevin Chang believe Amazon is planning for next year. Based on information from sources within Amazon’s supply chain in Asia, the two believe Amazon will release a low-cost smartphone in the $150 to $170 range, taking a slight loss on the device as it is doing with the Kindle Fire.
Chang and Mahaney said Amazon is developing the phone with Foxconn International Holdings. Given that the Kindle Fire utilizes Google‘s (NASDAQ:GOOG) Android operating system and Amazon app development is on that platform, it is likely that the Amazon phone also will be an Android device. Mahaney’s track record in prognosticating Amazon’s plans is decent, as he successfully predicted the release of Amazon’s $79 Kindle in May.
An Amazon smartphone certainly seems in line with the company’s expansion as a gadget maker. Amazon is working hard to establish not just a hardware presence with products like Kindle Fire, but a competitive mobile commerce ecosystem comparable to Apple’s iTunes.
In addition to the Amazon Appstore, long-standing digital music store and Kindle e-book store, Amazon is pushing its Amazon Prime premium subscription service as a Netflix (NASDAQ:NFLX) competitor with streaming video. All Kindle Fire buyers get a free 30-day trial membership to Amazon Prime, which should grow the subscriber base during the tablet’s release window. And for every 1 million new Amazon Prime subscribers, the company’s total revenue grows 1.5%. An Amazon mobile phone backed by the company’s brand and this ecosystem of services could change the whole mobile phone market.
No one owns the holiday season quite like Amazon. The company’s sales absolutely crushed Christmas 2010. On Cyber Monday 2010, Amazon sold 13.7 million individual products across all of its categories. That’s 158 items per second! Its Kindle e-reader was the hot ticket last year, and while Amazon didn’t disclose full Kindle sales, it did reveal the device became its best-selling product ever at the time, outdoing J.K. Rowling’s novel Harry Potter and the Deathly Hallows. And that book sold 15 million copies worldwide on its first day.
With Kindle Fire, the company is hoping to dominate this year’s holiday season. The Amazon phone should only keep the company’s winning streak running in 2012.