Amazon says it will introduce a new product—likely its first smartphone—at a Seattle event on June 18. A bizarre teaser video suggests the mystery device has a unique technical feature, possibly a simulated 3D display and interface.
The real question is how cheaply Amazon will price its phone, and more importantly, its mobile service. With such strong competition from Apple and Samsung, there are few reasons for anyone to buy an Amazon phone other than price. (Barring an engineering and design miracle, 3D alone won’t likely cut it.)
Conveniently, though, Amazon has a history of disruptive pricing. In the past, it has offered steep discounts on other phones (we once made a net profit buying a new phone from Amazon, after rebate), offered free mobile internet service to its Kindle owners, subsidized Kindle devices with advertising, and significantly undercut Apple on tablet pricing. The smartphone industry, however, is more complicated. In the US, Amazon’s largest market, mobile operators already subsidize smartphones to the tune of hundreds of dollars in return for a customer’s committing to a two-year contract.
Amazon’s boldest move could be to subsidize the phone itself—making it either free or very cheap—and either re-sell mobile service at very low rates, or get carriers to bid against each other for Amazon’s customers. Amazon could also effectively pay its users by offering discounts on other Amazon products or services—in an effort to drive mobile commerce, market share, or both. Or it could tie some features on the phone to an Amazon Prime subscription, as it already does with video streaming.
But the idea of Amazon doing anything truly revolutionary here seems far-fetched—the cost would simply be too high, and the benefits too slight.
More likely: A partnership with a major operator, with a modest special offer of some sort. This could be an extension of Amazon’s relationship with AT&T, which already provides service for its Kindle Fire tablet. Or perhaps it will involve T-Mobile, which, like Amazon, is based in the Seattle area, and has seen recent growth with somewhat disruptive new service offerings, including free international data roaming for smartphone subscribers and free Internet service for tablets. T-Mobile CEO John Legere has also teased an announcement for June 18. Is this it?