Just about the last thing anyone would expect Amazon (NASDAQ:AMZN) to be working on right now is a smartphone. Its Fire Phone was a massive failure back in 2014, and the market has only become even more difficult since then. But it looks as though AMZN is giving it another crack, reportedly working on an “Ice Phone.”
The code name is an apparent insider joke about the Ice Phone being the opposite of the Fire Phone, and not just in its success.
The entire strategy for the new Amazon smartphone appears to be the virtual opposite of its first attempt.
Fire Phone Disaster
The Fire Phone was aimed at the flagship smartphone market, intended to take on leaders like Apple Inc.’s (NASDAQ:AAPL) iPhone.
Fire Phone ran AMZN’s own Fire OS, came pre-loaded with Amazon’s own apps, including its Silk web browser, and was tied to Amazon’s Appstore. It featured a multi-camera array that supported its unique Dynamic Perspective feature and had a Firefly button to instantly identify products for easy purchase on amazon.com. Unlocked, it went for $650, the same as other flagship smartphones.
After being on sale for three weeks, it was estimated to have sold just 35,000 units. In comparison, Apple’s iPhone 6 launched around the same time and moved 10 million in its first weekend.
Amazon Ice Phone: Aiming Lower
Gadgets 360 broke the news about the Ice Phone yesterday. According to its report, AMZN could not be taking a more different approach with this new Amazon smartphone.
Instead of a customized OS, it will stick with Alphabet Inc (NASDAQ:GOOGL), running the latest version of Google’s Android and arriving with stock Google services such as Gmail pre-installed. Rather than trying to compete with flagship devices like the iPhone or Samsung Electronics Co Ltd’s (OTCMKTS:SSNLF) Galaxy S8, the Ice Phone has budget-level specs. It’s priced to reflect the modest ambitions, with a $93 price tag being thrown around. And the Ice Phone is not being aimed at the North American market, instead targeting India.
According to Gadget’s 360’s source, the Ice Phone doesn’t even come with Amazon’s Alexa — although that could possibly change in the final release version of the device.
A cheap Android smartphone, running Google services and aimed at the Indian market. What is Amazon’s game plan with the Ice Phone?
AMZN Sees Growth in India
Amazon has been investing in the Indian market, which it sees as a source of growth for its business. Last year it announced another $3 billion investment, bringing its total stake at the time to $5 billion.
The key to driving customers to amazon.com and Amazon services in India is mobile.
Unlike North America, the Indian smartphone market still has room for growth, and rather than expensive flagship devices, sales are dominated by more affordable mid-range and budget options.
Samsung is the leading vendor, but it’s selling mostly inexpensive J-series smartphones — the rest of the Indian market is dominated by Chinese manufacturers. The average sale price of a smartphone in India is currently $122, so $93 would make the Ice Phone a compelling option.
With a population of over 1.3 billion — just under China’s and four times that of the United States — and growing purchasing power, the Indian market represents serious growth opportunity for Amazon’s business. It just has to get a means of accessing amazon.com and services like Prime Video into the hands of those Indian consumers.
The Ice Phone — an affordable Android smartphone that does everything they want plus has quick and convenient links to Amazon’s services pre-installed — is the key.
And as Gadgets 360 points out, even if Alexa doesn’t make it onto the Amazon smartphone, the volume of data hitting AMZN servers if the Ice Phone is a success will still help in the ongoing development of its AI.
Amazon isn’t commenting, but if the Gadgets 360 story is correct, expect to see an Amazon Ice Phone launch in India this year.
