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

on October 14, 2013
Reading Time: 4 minutes

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.