5 Things to Expect From an Amazon Smartphone

by Brad Moon | April 15, 2014 6:00 am

Will they or won’t they? That has been the question about the long-rumored Amazon (AMZN[1]) Phone. While Amazon has denied it in the past, the Wall Street Journal is reporting an Amazon smartphone prototype has been demoed to developers[2] and that an announcement confirming the forthcoming Amazon phone could be made as soon as June.

Source: Amazon

Now that it has followed consumer electronics rivals like Apple (AAPL[3]) and Google (GOOG[4]) into tablets and the living room — via the recently launched Amazon Fire TV streaming box[5] — it doesn’t seem like much of a stretch for the company to push into mobile phones, one of the decade’s biggest hardware categories.

An Amazon phone would be very late to the party, but it would still have the potential to shake up the Apple/Samsung (SSNLF[6]) status quo.

Here are 5 things to expect from an Amazon smartphone.

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5 Things to Expect From an Amazon Smartphone: 3D Display

Let’s get this one out of the way first. One of the things that Amazon smartphone rumors have been consistent about is some sort of glasses-free, 3D display capability[8].

Source: Nintendo

Would being able to see products being sold on Amazon in three dimensions make the Amazon smartphone a must-have?

Maybe it could be used in gaming, as with Nintendo’s (NTDOY[9]) 3DS, to offset the considerable lead the iPhone and Android smartphones would have in game apps. Maybe Amazon is just trying to find some feature that will make its entry stand out in a crowded and mature smartphone market. After all, it would have to compete against lightning-fast processors, high-pixel-density displays, killer cameras and fingerprint sensors.

I’ve got my doubts about how effective 3D would be in selling an Amazon smartphone — it didn’t work too well in the TV market[10] — but it sounds as though Amazon is going to give it a shot.

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5 Things to Expect From an Amazon Smartphone: June Announcement

As mentioned, the smartphone market is brutally competitive right now, and between Samsung and Apple, buyers of premium smartphones are largely sewn up.

Source: Apple

Samsung just released its Galaxy S5 (read our review here[11]), but if Apple follows its past pattern of iPhone releases, it won’t announce the iPhone 6 until fall.

If Amazon can announce its own Amazon smartphone in June, it pre-empts the iPhone 6 announcement and may build enough buzz to actually eat into sales of Apple’s new smartphone in the fall.

And if Apple does the unexpected and announces the iPhone 6 at its June World Wide Developer’s Conference, Amazon would have the chance to steal some of Apple’s thunder by confirming its own Amazon phone.

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5 Things to Expect From an Amazon Smartphone: Wireless Plan Deal

Amazon has a history of cutting deals with carriers when it introduces wireless products. Buyers of 3G-enabled Kindles enjoyed free 3G connectivity — all the better for buying e-books through Amazon.com[12] — while Kindle Fire tablet owners were offered cheap yearly cellular data plans[13].

Source: Amazon

Current Amazon LTE partners include AT&T (T[14]) and Verizon (V[15]). It’s not a stretch to imagine an Amazon smartphone coming with some sort of sweetheart deal from one of these carriers, including cheap data.

All part of Amazon’s strategy to eat some expenses in the name of making buying stuff from Amazon even easier.

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5 Things to Expect From an Amazon Smartphone: All Prime, No Google Play

Amazon forked its own version of Android from Google’s open source software, and its Fire operating system powers Kindle Fire tablets and the Amazon Fire TV. It keeps users locked firmly into Amazon’s services and prevents downloading apps from Google Play.

Source: Amazon

Any Amazon smartphone is likely to employ this same strategy, running Android, but through the Fire OS version with hooks into all things Amazon and a wall around Google Play.

It wouldn’t be surprising of Amazon throws in a Prime discount with an Amazon Phone — that way, mobile users can easily whip out their Amazon smartphone in a store and order the same product they’re looking at, directly from Amazon (presumably cheaper) and without shipping charges.

You can also expect any Amazon smartphone to have a display worthy of playing Prime HD streaming movies.

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5 Things to Expect From an Amazon Smartphone: Cheap Price

Finally, if there’s anything resembling a sure bet when it comes to Amazon, it’s that it habitually prices its hardware near (sometimes even slightly below) cost. The theory behind this practice is that Amazon plays a long game: The company is willing to break even or even lose a bit of cash selling hardware that’s tied to its ecosystem, expecting that you’ll use it to buy physical or digital products from Amazon.

Source: Apple

So while Apple and Samsung continue to charge $650 and up for their flagship smartphones, it’s a fairly safe bet the Amazon smartphone will follow the pattern of its Kindle Fire HDX tablets[16] and undercut the competition by a significant margin.

With the Galaxy S5 now on shelves, the iPhone 6 (or possibly two new iPhones) expected in the fall and Microsoft’s (MSFT[17]) Windows Phone 8.1 getting rave reviews[18], 2014 is shaping up to be a big year for smartphones. Adding an Amazon smartphone to the mix could escalate it to a blowout year and shake up the industry in a big way.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

  1. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  2. Amazon smartphone prototype has been demoed to developers: http://online.wsj.com/news/articles/SB10001424052702303873604579495940522902678
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  5. recently launched Amazon Fire TV streaming box: https://investorplace.com/2014/04/amazon-fire-tv/
  6. SSNLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSNLF
  7. Compare Brokers: https://investorplace.com/options-trading/broker-center/
  8. 3D display capability: http://www.theverge.com/2013/5/9/4316124/amazon-building-smartphone-with-a-3d-screen-says-wsj
  9. NTDOY: http://studio-5.financialcontent.com/investplace/quote?Symbol=NTDOY
  10. it didn’t work too well in the TV market: https://investorplace.com/2013/08/ddd-group-celebrates-streaming-success-for-already-dead-3d-tvs/#.U0wfBl7obZs
  11. read our review here: https://investorplace.com/2014/04/galaxy-s5-review-ssnlf/#.U0wgjl7obZs
  12. Amazon.com: http://amazon.com
  13. cheap yearly cellular data plans: http://arstechnica.com/gadgets/2012/09/kindle-fires-4g-package-offers-250mb-of-data-a-month-for-50-a-year/
  14. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  15. V: http://studio-5.financialcontent.com/investplace/quote?Symbol=V
  16. Kindle Fire HDX tablets: https://investorplace.com/2013/12/kindle-fire-hdx-review-amazon/#.U0wa-F7obZs
  17. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  18. Windows Phone 8.1 getting rave reviews: http://arstechnica.com/gadgets/2014/04/windows-phone-8-1-review-a-magnificent-smartphone-platform/

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