- Amazon is holding a launch event on June 18 for a new hardware product.
- Previously, Amazon launched the Kindle eReader (2007); Kindle Fire tablet running Android (2011); and the Fire TV streaming video box (2014). An own-brand smartphone would be a natural next step which Amazon will have at least considered.
- Amazon operates one of the largest Android app stores after Google. In summer 2012, Amazon expanded the international reach of the store to nearly 200 countries. But has struggled for traction because no significant smartphone models have the store pre-installed.
- Facebook launched a smartphone in partnership with HTC using a Facebook user interface, Facebook Home, in April 2013.
- Amazon has over 237m active customer accounts globally, which represents customers who have made a purchase in the previous 12 months of which a small proportion, approximately one tenth, are Amazon Prime customers.
Amazon is already a key player in the smartphone market through its widely used mobile apps including Kindle, Instant Video, IMDB, Local, Cloud Drive, and the main Amazon app which supports its retail business. These apps benefit from wide availability on many smartphone makers' handsets and on different operating systems, including Apple's iOS, Google's Android and Microsoft's Windows Phone.
Amazon's mobile content has been successful because of this wide device compatibility which makes their content and services convenient for consumers to use.
But were Amazon to launch an own-brand smartphone they risk alienating the many existing smartphone makers, which are the platform for Amazon's current mobile content and services success to date.
So, why would Amazon consider launching its own smartphone?
There is a simple rationale for Amazon. Unless Amazon launches a smartphone, it will compete with the smartphone OS companies to acquire digital customers. Smartphones have become the key acquisition tool for digital ecosystems:-
How Amazon could succeed with a smartphone
The smartphone market is fiercely competitive with numerous challengers to market leaders Apple and Samsung. It's very hard to profit from making smartphones as a result. In this challenging smartphone market, Amazon must use both an innovative go-to-market strategy and create a differentiated product.
To succeed with an own-brand smartphone Amazon must:-
There are easier mobile strategies for Amazon
Any company looking to enter the smartphone market in 2014 must think hard about whether the costs and risks are worthwhile. Other strategies exist which are cheaper. Ask IHS for advice.
Facebook, Yahoo and eBay are all competing hard in mobile without an own-brand smartphone or smartphone OS: Facebook's symbiotic strategy on iOS and Android is especially interesting. Now, over half of Facebook's total advertising revenue comes from mobile. And, much of that mobile revenue is on a competitor's smartphone OS, Google's Android. If Facebook can prosper riding on other company's smartphones then so can Amazon.
Amazon must ask itself: Is launching a smartphone really the best strategy? Or, could Amazon's mobile business prosper more greatly through partnerships and app innovation.
Amazon could be successful with an own-brand smartphone if it adopts the strategy we set out above. But there are easier ways for Amazon to boost its mobile fortunes and drive up Amazon customer acquisition.