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Amazon reportedly wants to make first smartphone offering free

post #1 of 55
Thread Starter 
Amazon may be plotting a move into the smartphone segment, and the online retail giant may have just the trick to help it make a splash in that Apple/Samsung-dominated market: offering its smartphone for free.



Amazon has been rumored to be working on a smartphone for years, and those rumors have picked up steam in 2013. Now, Jessica Lessin cites sources familiar with Amazon's efforts in saying that the company wants to offer a free smartphone to consumers.

The free strategy is still in the planning stages, Lessin says, and it is not set in stone. One of Amazon's biggest concerns at the moment is reportedly getting the carriers on board with the plan. Telecoms regularly offer older and cheaper phone models for free, provided a customer signs up for a two-year contract agreement, but Amazon wants the phone to be free with or without a contract.

As with the retailer's Kindle Fire tablets, any smartphone from Amazon would run a forked version of Android, one with all of Google's services removed and running Amazon's own services instead. Amazon sells those devices, as well as its line of dedicated Kindle e-readers, almost at cost, with the plan being to make the money back selling goods and services to the customer. The free smartphone plan would be an extension of that mindset, though how viable that plan is remains to be seen.

Earlier this year, rumors reemerged that Amazon was planning to launch a smartphone in 2013. Those rumors first centered around a device with a 4.7-inch screen, while later reports had the handset implementing a glasses-free holographic 3D display. The phone has yet to materialize in any form, but it is possible that Amazon will show it off when it reveals the next generation of Kindle Fire devices. When that might happen is uncertain.
post #2 of 55

Good for them....

 

Ugh!

post #3 of 55
So how would Amazon exactly pay for these free phones, especially if they're unlocked and don't require a contract? Even their tablets, which they're supposedly selling at cost aren't free to the consumer.
post #4 of 55
Yeah, right 4.7 inches. It's too small if you can fit it into your pocket. Amazon needs to shove a phone into their Kindle fire and make it free. /s

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #5 of 55
We lose $300 on every one we sell, but we'll make it up by selling things to people on them! And ads that must be clicked on every time you get a call before it will let you pick up!
post #6 of 55
This sounds anticompetitive ... If Apple can't charge a little over than Amazon why does Amazon get to undercut all business and offer for free ?
post #7 of 55

When I see the word "free" there are some old sayings that come to mind...

 

"you get what you pay for"

 

'there is no such thing as a free lunch"

Hmmmmmm...
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Hmmmmmm...
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post #8 of 55
Originally Posted by ILM1997 View Post
This sounds anticompetitive ... If Apple can't charge a little over than Amazon why does Amazon

 

Because they paid off the DoJ and Apple didn't. Simple.

post #9 of 55
Quote:
Originally Posted by AppleInsider View Post

The free strategy is still in the planning stages, Lessin says, and it is not set in stone. One of Amazon's biggest concerns at the moment is reportedly getting the carriers on board with the plan. Telecoms regularly offer older and cheaper phone models for free, provided a customer signs up for a two-year contract agreement, but Amazon wants the phone to be free with or without a contract.

Can't believe they'll have trouble getting the carriers to just give them away for free. /s

 

I'm left wondering how they would actually get paid for in the long run. Are they to be subsidized by the carriers? Amazon gives the hardware to the carriers and gets a cut of the data plan profits? If you aren't REQUIRED to sign a contract, would lots of people just take them and use them like an iPod Touch?

post #10 of 55
The DoJ will allow this predatory pricing of free. Then DOJ will start suing other phone manufacturers demanding them to be free.
post #11 of 55

Also, it's a huge party line, you have to wait for everyone to shut up before you can say anything, and everyone else can hear what you say and make comments.

post #12 of 55
Most likely "free", but on contract.
post #13 of 55

Ad-supported. 

 

In-phone purchase ($699) to remove ads. 

post #14 of 55

Every Apple employee and iPhone user should just go grab the free one and then throw it in a drawer. Millions of free Amazon phones given away and not a dime in return for all those ads. That would stop this predatory pricing scheme of Amazon. Oh and the DOJ can bite me if they ignore this scheme which they probably will.

“What would I do? I’d shut Apple down and give the money back to the shareholders”

Michael Dell - 1997

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“What would I do? I’d shut Apple down and give the money back to the shareholders”

Michael Dell - 1997

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post #15 of 55

I hate the freemium model on any app store. I am not gonna buy freemium hardware. 

post #16 of 55
Profit-postponing moves have worked well for AMZN. This is another one.
post #17 of 55
Quote:
Originally Posted by quinney View Post

Profit-postponing moves have worked well for AMZN. This is another one.

 

Should move the forward p/e above 150.  :p

Hmmmmmm...
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Hmmmmmm...
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post #18 of 55
Originally Posted by island hermit View Post

Should move the forward p/e above 150.  :p

 

It was 3,000+ before they lost money in a quarter. Are they back in the black?

 

EDIT: I love their really classy image, by the way, of a dirtied and scuffed Time Capsule. Particularly since the Seagate drive next to it isn't damaged in any way.


Edited by Tallest Skil - 9/6/13 at 3:33pm
post #19 of 55
Quote:
Originally Posted by GadgetCanadaV2 View Post

Every Apple employee and iPhone user should just go grab the free one and then throw it in a drawer. Millions of free Amazon phones given away and not a dime in return for all those ads. That would stop this predatory pricing scheme of Amazon. Oh and the DOJ can bite me if they ignore this scheme which they probably will.

If this were to happen the iPhones ~40% US market share would drop below 29% and we would all have to suffer through a barrage of fandroids claiming Apple is doomed...

Though, yes it would be worth it to see Amazon be driven to bankruptcy.
post #20 of 55
Quote:
Originally Posted by GadgetCanadaV2 View Post

Every Apple employee and iPhone user should just go grab the free one and then throw it in a drawer. Millions of free Amazon phones given away and not a dime in return for all those ads. That would stop this predatory pricing scheme of Amazon. Oh and the DOJ can bite me if they ignore this scheme which they probably will.

Haha, I was thinking the exact same thing.
post #21 of 55
Quote:
Originally Posted by Rogifan View Post

So how would Amazon exactly pay for these free phones, especially if they're unlocked and don't require a contract? Even their tablets, which they're supposedly selling at cost aren't free to the consumer.

If they really do give them away for free, unlocked and without a contract, they might have a serious antitrust problem there. With their huge market position in eBooks, that may be anticompetitive.

They got away with it on the Kindle because for purposes of dumping laws, 'cost' is essentially out of pocket cost, not total amortized cost.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #22 of 55
First, we don't know if any of this is true.

Second, I can almost guarantee "free" is the wrong word. More than likely Amazon wants to use an alternate business model of some kind and need the carriers to help make it happe , and that's probably the hold up

If Amazon was going to just give these away with no strings attached carriers would be all over it. A free smart phone means more subscribes and that's all carriers want.

My guess is Amazon is looking to be an MVNO of sorts and handle the subscriptions themselves. Something like that and this would make sense.
post #23 of 55

If it's free there's no way it will be without a contract.  Someone has to pay for the phone. Even if it costs $50 to make, Amazon isn't guaranteed to make that up from every person who would get one.

 

This may be the way smartphones go considering that the tech in them is becoming more and more common year after year.

 

Just so you know, I love both companies. They both have weaknesses and strengths.

post #24 of 55
Quote:
Originally Posted by Masteric View Post

Most likely "free", but on contract.

That would be my guess.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #25 of 55

2012 Amazon price to earnings ratio: 1,050!!!!!!!

 

APPL sells a zillion phones and has a SLIGHTLY lower margin compared to 2008 = STOCK GOES DOWN!

 

AMZN gives away their freaking product at a huge loss with negative margins = STOCK GOES UP

 

Please please laws of gravity, logic, and rationality, resume.

post #26 of 55
Quote:
Originally Posted by ILM1997 View Post

This sounds anticompetitive ... If Apple can't charge a little over than Amazon why does Amazon get to undercut all business and offer for free ?

Apple can charge whatever they want just as long as everyone else can charge whatever they want.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #27 of 55
Quote:
Originally Posted by 512ke View Post

2012 Amazon price to earnings ratio: 1,050!!!!!!!

APPL sells a zillion phones and has a SLIGHTLY lower margin compared to 2008 = STOCK GOES DOWN!

AMZN gives away their freaking product at a huge loss with negative margins = STOCK GOES UP

Please please laws of gravity, logic, and rationality, resume.

It's quite simple, what's up tends to go down and what's down can only go up. They don't care about what's happening now but what's going to happen. The potential to make a profit is more attractive than actually making a profit.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #28 of 55

I imagine this will "sell" quite well for people willing to live with the associated compromises. People never respect "free", but they will take it.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #29 of 55
It's going to be using that browser that renders your page views at amazon, so it'll be slow hardware, and it'll only be available in a few countries, meaning US and maybe, who cares its going to be in two countries ... Ok China too ... in a few years time. People who can't afford flagship smartphones will eye this, it's a race to the bottom situation, if it succeeds, it will ruin business for everyone, including app developers, but its great for the low income consumers or even high income cheapskates.
post #30 of 55
Quote:
Originally Posted by Quadra 610 View Post

Ad-supported. 

In-phone purchase ($699) to remove ads. 
Sign me up. I take at least 100, my garage will be full.
just waiting to be included in one of Apple's target markets.
Don't get me wrong, I like the flat panel iMac, actually own an iMac, and I like the Mac mini, but...........
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just waiting to be included in one of Apple's target markets.
Don't get me wrong, I like the flat panel iMac, actually own an iMac, and I like the Mac mini, but...........
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post #31 of 55
Baloney. This is all about getting the shysters to prop up the PPS. If it was easy to paint a few trucks with amazon's logo and claim a grocery delivery business is thriving and get CNBC to show pictures of the truck. This is even easier. Because this is nothing but vapor but will be worth another $50 per share move up for the bozos.
post #32 of 55
Yes, and every 100th customer will receive a free unicorn.

This attention-getting is the closest we'll ever see to a free Amazon smartphone. Amazon doesn't give away free Kindle epaper readers, even though they're inexpensive and only consume what Amazon sells. They're certainly not going to give away a smartphone that costs much more and that'll only incidentally generate other business for Amazon.
post #33 of 55
Quote:
Originally Posted by ILM1997 View Post

This sounds anticompetitive ... If Apple can't charge a little over than Amazon why does Amazon get to undercut all business and offer for free ?

 

Because Amazon knows the DOJ has their back. /s

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply
post #34 of 55

It'll analyze your emails, search terms, websites, text messages and voice conversations, and make shopping recommendations, just for you. 

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply
post #35 of 55
Quote:
Originally Posted by GadgetCanadaV2 View Post

Every Apple employee and iPhone user should just go grab the free one and then throw it in a drawer. Millions of free Amazon phones given away and not a dime in return for all those ads. That would stop this predatory pricing scheme of Amazon. Oh and the DOJ can bite me if they ignore this scheme which they probably will.
Yes, go take them and throw them every where, use them as trash, and when you click the on button and you haft to remember your password it will be 10 sets of 3 advertisements, for every time you get it wrong you get 10 more (you memorize there color pattern to do it) and then when you click an app you wait for advertisement. Then when your playing a video or music you get 2 adds (1 before and one after) that corresponds. To answer a call your advertisement selection is just first 3. When you try to turn it off, it pops up to just 24 hour advertisements on the screen ran on a separate battery twice the capacity than the other one (in other words when plugged in it first charges that one then charges on board one with advertisements at that time and ads battery again, then if it dies it will repeat battery dead and advertisements on [same for just off] and that's how they make profit!!!
post #36 of 55

Some of you are giving Amazon WAY too much credit.  Amazon won't strong arm anyone out of the market with this move.   As far as this being "anti-competitive", that's pretty ridiculous.  There have been free phones for years.   

 

Apple isn't the one that needs to worry about this.  Samsung and LG have A LOT more to be worried about than Apple does.  People buy Apple with the mindset that it is a premium product or because they want iOS, but Samsung and LG make cheap Android smartphones that carriers give away or sell for $50 with contract.  This Amazon phone would go for the jugular in that niche of cheap phones.  

 

If Amazon does this it is an act of desperation and a last ditch effort to scoop up a piece of the mobile market.  Amazon has seen Microsoft and Blackberry both struggle to get a foothold against Apple and Samsung, so they are willing to try something radical.  Still, making something free is no guarantee of anything.

 

....except for A LOT of attention.

post #37 of 55
I think this will be offered "free" to everyone who spends at least $500 per year on Amazon listed products... and more probably non-physical items such as e-books and music files.
post #38 of 55
UNICEF gives away free bags of rice. It's like that.
post #39 of 55

Here's how it can work. You get the Amazon smartphone for free, but the only way to get voice minutes and data time on it is to buy them through Amazon. But you don't have to buy blocks of minutes and data time directly, though you could and it may be expensive. Amazon will give you "Smartphone points" with every purchase made. Much like the old days of "Blue Chip Stamps". They can offer double or triple points on certain high margin items or items they want to clear out. "Smartphone points" can be redeemed for voice or data time at different rates and as needed. Not only that, the points you earn on an Amazon VISA card can also be used to buy "Smartphone points". And everything is hassle free. The phone is tied to your Amazon account, so you never have to replace sim cards or even plug your phone into a computer to add the minutes and data time. Just log on to your Amazon account and add the time needed with your accumulated "Smartphone points".

 

This may not be a cheap way to own a smartphone if you need a lot of minutes and data. But if you're not a heavy smartphone user, you're already spending a couple of thousand dollars a year at Amazon and also use an Amazon VISA card, then it could truly mean a free smartphone. Or at the least an inexpensive way of owning one.

post #40 of 55
Well, if the phone is free, big deal. There are free phones available now on contract. But if the cellular service is free, that is real news. It is hard to imagine carriers going along with that--ever. It would completely destroy their business model.
Amazon could still start their own MVNO operation and do whatever they want. That would still leave the problem of how you make enough money with such an arrangement. Bezos seems to have a reality distortion field in the area of profit and loss, but this would be asking a lot of the old RDF.
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