The news that Amazon is contracting Foxconn to manufacture a smartphone based on Android was inevitable. But this won’t be a device to take on high-end products like the iPhone or the Samsung Galaxy S III, rather it will be an affordable conduit for buying stuff.
Devices like the hugely successful Amazon Kindle Fire are designed with one thing in mind: pushing games, apps, e-books, movies and other content via the web.
Amazon has shown calculation and nerve in how it has diligently gone about creating an e-reader and then a tablet market.
Instead of competing at the higher end of the tablet market, Amazon.com brought out an affordable tablet and it was snapped up to the extent that it is regarded as second only to Apple, which has two-thirds of the global tablet market, while others like Samsung have had to languish in the market.
The only blot on Amazon’s horizon in the low-cost devices segment is Google, which this month will start shipping the Nexus 7 tablet and will also sell e-books, movies and music, as well as apps via its Google Play Store.
Shhh, look the other way
Amazon could well be hugely successful in the smartphone market if it takes the same approach, bringing out low-cost handsets engineered to act as conduits for selling content.
Why? Well, everyone else that has focused on the high-end smartphone market has been given a thorough trashing by both Apple and Samsung. HTC is a case in point – despite bringing out elegant and attractive devices like the One X, its profits have nosedived in Q2 by 58pc.
The same trashing is also being meted out to Nokia and indeed it is Nokia and Microsoft who could be forced to learn something from how Amazon approaches the marketplace if the Kindle Fire approach is anything to go by.
The high cost of smartphones means the vast majority of mobile users in the world have yet to move from feature phones.
There is also a meaningful shift in how consumers are consuming digital media content and kids as young as nine or 10 are already shaping the buying norms of the coming decade in how they discover content like music and how they cut corners to get it in an affordable, even free, way.
Amazon could wade rather elegantly into this crowded market and hold sway.
Why? Because this market is only crowded at one end – the higher, expensive end.
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