If Jeff Bezos Is Serious About An Amazon Phone He Better Take Out His Wallet

by Brian S Hall   |   October 14th, 2013

Over the past several weeks, rumors of an “Amazon Phone” have become more persistent, if no more credible. The rumors stick, of course, because Amazon has years of experience designing, developing, selling (and I assume servicing) personal mobile computing devices — the Kindle line of eReaders and tablets. In addition, Amazon operates its own Android app store, has a very successful cloud infrastructure platform, and manages one of the larger direct-to-consumer smartphone channels. Add to this the company’s robust digital media ecosystem — books, music, movies and more — and it’s easy to understand why so many believe Amazon can and will make its own smartphone.

There’s only one problem: every time we might use an “Amazon smartphone” we most certainly are (via their cloud, apps, payments platform, rumored smartphone sensors and integrated services) visiting Amazon.

And Jeff Bezos has taught us that every time we visit Amazon we should demand and we should receive a whole host of free goodies. This alters the entire Amazon smartphone equation.

Free Free Free!

A famous Bezos quote is “there are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.”

I won’t call Bezos a liar, the quote is accurate. Only, it’s not complete. Bezos and Amazon often do charge less than the competition. They are like WalMart in this regard. Where they are different, however, is in making that (slightly) lower price even more appealing by throwing in a feast of freebies.

Amazon Prime, for example, is damn near a steal for my family — just on shipping costs alone. There’s also the many free streaming movies we get for being Prime “subscribers.” We get free books on Kindle, free Android apps, free cloud storage for our many digital belongings and much more. Then there’s all the sales taxes we’ve saved by choosing Amazon instead of buying local. I shudder to add those up.

The modus operandi of Amazon isn’t “cheap” or “low price.” Rather, it’s using other people’s money — including some from Wall Street — to subsidize the company’s most favored customers.

I am happily one of Amazon’s most favored customers.

But I have no intention of getting an Amazon smartphone, however. Not unless Bezos hands me a great deal more freebies than ever before.

All Amazon All The Time

Matthew Panzarino of TechCrunch recently provided details on the rumored Amazon smartphone(s).

Amazon is planning two devices, the first of which is the previously rumored ‘expensive’ version with a 3D user interface, eye tracking and more.

Another feature said to be planned for the device, but not yet locked for release, is an image recognition feature that lets users take a shot of any real-world object and match it to an Amazon product for purchase.

Count me as highly skeptical on any of this. An actual value-enhancing 3D screen — before Samsung, Apple, Sony, LG or Motorola? Eye tracking and image recognition that really works? From the company that is primarily a web commerce and services concern?

Worse, the company suggests they may charge us for their smartphone! Recall, Amazon publicly told AllThingsD: “we have no plans to offer a phone this year, and if we were to launch a phone in the future, it would not be free.”

If it’s not free, what could be the actual selling point? Better hardware? Better software? Better ecosystem? That seems extremely unlikely. Lower prices? Between iTunes and App Store pricing and Google giveaways, how much lower could Amazon go?

Answer: they’d have to start paying us to use the device.

It’s the opposite of free!

This is not so far-fetched.

The Opposite of Free

Smartphones are profoundly altering commerce. We use them to buy, to research what to buy, to see what is available to buy — at this moment, at this exact location, and from whom. We use our smartphones to complete the purchase, to make the payment, to store our coupons, to ask our friends for recommendations.

Amazon wants badly to capture and monetize as much of this action, and as many of these steps, as theoretically possible. Give Bezos his due for thinking in such grand terms.

Everything Google does, for example, is to get us to provide more of our personal information, which they can then monetize. Everything Amazon does is to get us to make more of our purchases through them. An Amazon smartphone would no doubt be designed for just that.

Which, from a user’s standpoint, sounds absolutely dreadful.

An Amazon smartphone could only work if Amazon paid us to use it.

Amazon is a Tiger. Jeff Bezos the Tail.

In a recent piece in BusinessWeek, Bezos and Amazon are reverentially lauded:

Today, as it nears its 20th anniversary, it’s the Everything Store, a company with around $75 billion in annual revenue, a $140 billion market value, and few if any discernible limits to its growth.

I’m less sure of that last bit. Admittedly, I use Amazon regularly. The reasons are clear:

  1. the sales process extracts only minimal pain
  2. the products are available within only a few days
  3. the prices are reliably low
  4. all the free stuff the company throws in with every purchase

Just one of those goes away, however, and I will look elsewhere — possibly even make my purchases elsewhere. Which means there is at least one very obvious limit on Amazon’s growth: if the rubes who are subsidizing Amazon’s most favored customers ever rebel, us most favored customers just might go elsewhere.

I can’t say when or if that will happen. But, I can say that if the Amazon smartphone is not free, as Amazon says, then it will have to compete with other devices. I simply do not believe Amazon can win on a level playing field.

I could be wrong. There may well be an Amazon smartphone on the horizon. It may turn out to be great. Time will tell.

But I am certain of this: Jeff Bezos better be ready to pull out his wallet if he’s serious about entering the smartphone wars. I will make him pay a fortune for my business. I suspect we all will.

Brian S Hall

Brian S Hall writes about technology and change. His work has appeared in Techpinions, ReadWrite, the Wall Street Journal, LinkedIn, The Push and Business Insider. His latest novel, "Love in the Time of Caller ID" is available from Amazon and on iBooks.
  • http://www.BarnesFamily.com/ davebarnes

    @Brian,
    You listed 4 reasons for using Amazon.
    I believe there is a very strong 5th one: The item you want is available. (Huge inventory)
    For example, the other day, one of our cheap, builder-installed bathrooms fans died. So, I went to the Home Depot website to find a replacement motor or complete fan assembly. Nothing even close. So, then I went to Amazon and searched for Broan 688 and poof: there it was. $13 with Amazon Prime. Given that Amazon had it and made it easy to buy and delivered it, Jeff left money on the table. If it had been $19, I still would have bought it.

    • http://www.brianshall.com/ Brian S Hall

      Thanks. I considered that. I was looking for a CO2 alarm replacement last week and Home Depot didn’t have it. Amazon did — and I got it simply by typing in the model number of the old one.

    • qka

      @davebarnes:disqus
      Actually, your 5th reason is my major reason. I can wait for the non-Prime free shipping time of a week or so. I have a conscience, so I try to shop local, if the price is not too out of line. Because I’m not a prime customer, or whatever, but I don’t see, know about, or miss the freebies.

      And Brian, in your reply, you bought a CO detector, not a CO2 detector. You breathe CO2 out, with little ill effect; CO at even lower levels can kill you. As a volunteer firefighter, it’s one of my irritations when people confuse the two.

      • http://www.brianshall.com/ Brian S Hall

        Got it. CO2. Thanks.

  • https://www.europlugs.com/ EuroPlugs

    Well your right about Google monetizing our info. I’m in a city where Google purchased the local fiber and is offering it for up to 5Mbps for free. If you want more you have to purchase 100Mbps for like $75. The point is, I agree that Amazon knows they can get you to get a phone from them because there will be other perks that they offer which are more affordable than competitors. Not sure exactly what, but I’m sure they’ll have a plan.

  • modalsystem

    I don’t think Amazon will give away the phone for free,but I think they are likely to give away a certain amount of talk/text/data per month to Amazon Prime members.I think an Amazon phone is going to sell very well and so will an Amazon set top box if they ever release them.I already use my Kindle Fire HD as a free phone using the magicjack app.As long as I have a WiFi connection,I get free phone service,and I can get WiFi almost anywhere in my area.

    I could envision Amazon starting something like a “Prime Plus” premium membership where people could pay let’s say $150-$200 a year and get unlimited talk/text/data on their Amazon phone plus the regular benefits of their current Prime service.Amazon,Magicjack,Sprint and Freedompop are the companies I am keeping my eye on regarding current and future ultra low cost mobile phone service.I think a lot of people who recently signed 2 year contracts with the current large mobile carriers are going to regret it when they see the deals that will become available in the near future,as well as the ones currently available that they are not yet aware of.

    As of now,I am using magicjack plus for my home phone service for $30 a year($2.50 a month),Kindle Fire HD with magicjack app(free as long as you have WiFi connection) and Tracfone cellphone for rare occasions when I am away from home and don’t have access to WiFi($7 a month for minimal minutes).Very happy with that combination for $10 a month.

    • http://www.brianshall.com/ Brian S Hall

      That sounds very appealing.