November 21, 2011

The Amazon phone: When is it too much?


Amazon’s Kindle Fire seems poised to make a big splash this holiday season, with early trajectories pointing to a staggering number of tablets sold by the end of the year. Analysts have close to doubled their early predictions based on the internet retailer’s initial sales. Clint Boulton writes for e-week:

The e-commerce giant began shipping the Fire Nov. 14 to those who pre-ordered it, and early reviews have been largely mixed.

However, most analysts believe the custom Android tablet’s $199 price point will make it too hard to ignore among cost-conscious consumers who balked at paying $499 or more for Apple’s (NASDAQ:AAPL) iPad, or other higher-priced Android tablets.

Count Piper Jaffray analyst Gene Munster among those. Munster, who did channel checks and found the device rated highly among consumers, said Amazon will sell some 4 million Fire slates for Q4, much greater than the 2.5 million he originally estimated for the new gadget.

Amidst this information comes another report of Amazon’s intention to release a smart phone in the fourth quarter of 2012. Personally, I find the thought of an Amazon branded and maintained smart phone is scarier than any SkyNet invention. The fact that Google knows everything I do online and probably more than a little about what I do offline too, is not nearly as disconcerting as the concept of Amazon having access to even one outgoing phone call.

According to the Wall Street Journal and this InventorSpot blog post the phone is a reality and looks to be built on the lines of the Kindle Fire.

Amazon seems to have been on “fire” lately, and it looks like the company is ready to continue its streak of product launches with the ongoing development of a smartphone. At least, according to Citigroup’s research department. Some supply chain channel checks in Asia have revealed that an Amazon phone, jointly developed with Foxconn, may hit the market by the fourth quarter of 2012.

The device is rumoured to contain a Texas Instruments OMAP 4 processor and will likely share a few components with Amazon’s other products, notably the baseband controller from QCOM. A build price of between $150 and $170 is quoted, but if Amazon wants to use the device to sell their digital services (a strategy the company is using with the Kindle Fire), the phone will likely sell for about the same amount, if not less.

When, though, is it too much? That’s the question in my mind. Amazon has only one way it knows how to go about its business, and that’s constriction of the competition. When is a company who plans on gaining a stranglehold on distribution, retail, publishing, computing, streaming videos and the phone market finally have too many irons in the fire to either successfully manage them or have too much sway to not be considered a monopoly?

Of course, I have no idea who would actually purchase an Amazon phone, which apparently matters very little.

Paul Oliver is the marketing manager of Melville House. Previously he was co-owner of Wolfgang Books in Philadelphia.