Amazon is working on its own Android-based smartphone to compete with Apple and Google in the digital content arena.
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Amazon has decided it can't rely on its Kindle tablet products alone in the competitive digital content business. In order to stave off Apple and Google's digital content ambitions, Amazon is developing a smartphone of its own. The device will run Google's Android platform, according to sources cited by Bloomberg.
Chinese manufacturing firm Foxconn, which builds some Apple products (including the iPhone), is working with Amazon to develop the device. Rather than aiming the top of the smartphone market, it will likely be a budget offering. Pricing is one of the key differentiators for Amazon's Kindle Fire tablet, which costs $199. As a digital content device, it drastically undercuts the iPad's entry price of $499. It's unclear what price point Amazon hopes to achieve with this smartphone.
Further, Amazon is seeking mobile patents in what can only be viewed as a preventative move to protect itself. Nearly all smartphone companies are tangled in a web of patent-related lawsuits. Surely Amazon wants no part of that, and Bloomberg's sources say the company has already sought to make several patent purchases.
Bloomberg didn't suggest when the device might launch.
Is this device necessary, and can Amazon really do a better job of creating a digital content consumption device than its competitors are already doing? It's hard to say.
Apple completely owns the digital music store space. It's far and away the number one store for digital music downloads. Apple has been coaching Internet users to download music for nearly a decade, first to iPods, then to iPhones and iPads. Apple also offers a cloud-based music service that lets iOS device users access their music from a range of different hardware. The same goes for movies and television content. Apple's iTunes Store integrates so well with its products that it's going to be hard to displace.
Amazon's digital music ranks behind Apple's, but is sizable in its own right. Amazon sells digital downloads not only to its own Kindle Fire tablet, but also to computers and Android smartphones and tablets, via a dedicated music downloading app. Amazon already has a significant footprint on Android-based devices via apps and services it has built over the years.
Then there's Google and its Play Store. Google's digital content ambitions are really just getting underway with the Play Store, which now offers music, movies, magazines, books, and television shows. Google's new Nexus 7 tablet looks to compete with the Kindle Fire. Is this new tablet making Amazon feel the heat?
The bigger question is: Will an Amazon-branded smartphone help Amazon actually sell more digital content? Well, the device itself has to sell to consumers first. The sheer volume of competing devices is overwhelming. The number of unanswered questions are vast. So many factors will influence consumer purchases of such a device.
Which carriers will sell it? What technology will it offer? Can it match the specs of the best smartphones and still do so at an attractive price point? Will Amazon give discounts on digital goods to Amazon smartphone owners, or will they have to pay the same price as Android and iPhone customers? How will video content sales/rentals work—the same as on the Kindle Fire?
Amazon might be working on a smartphone, but the hurdles are high and the obstacles many--especially if it wants to take on Apple and Google.
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