The smartphone industry has been booming for the past few years, mainly since the iPhone launched in 2007, and we’ve seen companies rise and fall, mergers and acquisitions and new comers to the fray. One of those new comers is Amazon.com, who began by being an online book reseller, who gradually expanded its business to a multitude of products, eventually they began to compete with big box retailers like Walmart and Target, the latter of which stopped selling Amazon’s Kindle line of devices because they were tired of selling a competitors product, who was essentially undercutting them on competing products, like home furnishings.
While Amazon has been in the hardware business for a few years, with their Kindle e-Readers, it was late last year when they made a splash into the world of tablet computing with the Kindle Fire, a cheaper alternative to the iPad, which ran on Google’s Android operating system, albeit a heavily modified version, but was fueled by their own AppStore. Gradually, without drawing to much attention, Amazon prepared to take on Apple and even Google, by building an ecosystem, with their Amazon Music Store and Cloud Storage Service, their Amazon Book Store, Amazon Prime for TV and Movies and of course, the Amazon AppStore. Once all the components were in place, the Kindle Fire was launched and went on to become the best selling Android tablet and the first “real” competitor to the iPad.
Now that Amazon has the Kindle Fire in place and a line of successors forthcoming, it appears that Amazon is looking to expand again, this time into the highly competitive market of smartphones. But is this an area where Amazon needs to expand? We’ve seen big players like HTC, who had a stellar 2011, only to come to a screeching halt, thanks to the iPhone 4S. We’ve seen Research In Motion, the once dominant smartphone manufacturer, crumble before our very eyes and companies like LG and Sony continue to release devices, yet receive almost no attention whatsoever, at least from the general public. Perhaps the only Android OEM that has gained any traction, has been Samsung, who doesn’t look eager to share its top spot as the premier Android manufacturer. According to recent reports, Amazon is not just thinking about making a smartphone, they have already begun testing one.
Here’s the problem, Amazon, by many people’s assumption, is an online book seller. Yes, most people know they sell other things like Hoover vacuums, pipe cleaners and scrunchies, but first and foremost, they are a book seller. The reason the Kindle Fire was such a success, was because it was a Color e-Reader and it had a cheap price, not because it was better than the iPad or because it was a beautifully designed product. Hell, it’s the same design as the failed BlackBerry Playbook, further proving my point, people didn’t buy it for looks, they bought it because it was a Kindle and they could read their books on it. Tablets for many people are a novelty, a luxury, a device to obtain content around the house or on a trip. They still haven’t replaced desktops, laptops or smartphones. Smartphones are a different beast, look at Samsung for instance, they are dominating in the smartphone field and yet they struggle to sell tablets, despite the fact they make different sizes with different price points. They two categories are different, people buy smartphones for a completely different purpose, some want raw power, others want ease of use, some want a phone that looks nice, while other just want a phone that gets email and makes phone calls. Nobody buys a smartphone as a luxury or as a device to just consume information. Apple and Samsung (more specifically, Android) have this market pretty much locked up. RIM is all but dead and Microsoft is struggling to get Windows Phone off the ground, even with amazingly designed devices like the Nokia Lumia line. So Amazon thinks that by using their “skinned” version of Android, they’ll just jump right in and get a big piece of the pie?
Here’s the problem, Apple’s App Store and iTunes services for TV and Movies as well as music stretch all over the world in almost 70 countries. Google’s Play Store, while no where near Apple’s, also has some international reach, Amazon however does not. Amazon’s Prime service is only available here, in the States. Without any type of international services, aside from books, Amazon cannot effectively compete against Apple and Android, they can’t expect sales in the US to make their device a success. Amazon is going to have a hard time convincing iPhone users to ditch their rich and robust ecosystem for a Kindle phone, as for Android, sure they share virtually the same apps, but without Google’s services like Maps, Navigation and GMail, they won’t convince those customers either. Not to mention, if Amazon decides to pull the same trick they did with the Kindle, by selling a rock bottom priced smartphone, it won’t be able to have the same “top-of-the-line” type specs that a Galaxy S III, One X or even an iPhone offer. Perhaps the only audience that Amazon could sway, would be those who are looking for a free or cheap phone without a contract. Sure, a $199 phone, off contract would be nice, but if I can get a phone that has the latest display technology, a fast quad-core processor, more RAM and more storage for $199, and all I have to do is stay with the same provider I’ve been using for 6-7 years, for two more, I think I’d take the better phone, at least for longevity and future-proofing purposes.
I know that Amazon feels they are missing a piece of the pie and because they have this ecosystem that’s working well for the Kindle, they probably feel it would be a waste not to expand those services to support a smartphone. But they really need to look at the market and take notice, that if Microsoft, who could easily buy Amazon itself, is having trouble, they may not be making the wisest decision. Keep in mind, since the new iPad was release, the Kindle Fire’s sales have dropped significantly. Once a better product is released or the “buzz” of a cheap product wears off, so does the appeal. Amazon can only play the “it’s cheaper, so buy it” card so many times before the public won’t react. I’m not saying Amazon can’t or won’t have a success, but the smartphone market is more dense and more competitive than the tablet market. What may have worked for the Kindle Fire, may not necessarily work for a Kindle Smartphone.
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