
Amazon Wants To Offer Its Smartphone for Free. Who Will Follow? - ssclafani
http://jessicalessin.com/2013/09/06/exclusive-amazon-wants-to-offer-its-smartphone-for-free-who-will-follow/
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snorkel
Interesting if it didn't require a cellular plan to make Telco calls. A WiFi
only smartphone would be acceptable to consumers if it was free. If you're not
online then incoming calls go to voicemail, which is not great for emergency
calls but it's free so stop complaining.

~~~
hershel
Republic wireless offers a $19 per month, all you can talk service by using
wifi. Maybe amazon can offer this cheaper. Say at $10 a month with no profit.
So it makes more sense to offer service.

I have seen some phones in Chinese retail sites for $90. For amazon it's
cheaper say $3 per month over 24 months.

Now consider the revenues for content, apps, increased e-commerce sales, ads
and better profiling and maybe some profit from the phone service - amazon
have plenty of ways to earning this $3 per month.

The only question - what about people getting the phone and not using it at
all?

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xsighted
True or not, phones are becoming a medium to bring value to a larger
ecosystem. I can see android's value to Google. The only play Amazon might
have here is to control media consumption by offering their phones. Somehow it
seems unlikely of them to offer phones for free though.

~~~
michaelbuckbee
Amazon already sells their Kindle devices at a loss [1], it doesn't seem like
a stretch to think that with an even lower cost device such as a phone that
they might try to offer it for free to up their marketshare and ecosystem.

1 - [http://www.rawstory.com/rs/2011/11/18/amazon-sells-kindle-
fi...](http://www.rawstory.com/rs/2011/11/18/amazon-sells-kindle-fire-below-
cost-research-firm/)

~~~
MichaelApproved
There's a difference between selling at a loss and giving something for free.

If you sell something at a loss, the consumer still had to put up some money
and has a clear interest in using the product. That makes taking the loss
upfront less of a risk since the consumer is more likely to use the product
and eventually make a profit for you.

If you give it away for free, people will accept the product, whether they are
interested in using it or not. That means a smaller percentage of people who
take the product will actually be likely to use it. That makes recouping your
loss much harder.

~~~
kbenson
I can see free with contract (we have that already), but free without? Maybe
they could do it if they focused on what I've wanted in a phone recently, a
small phonebook and alarm capable device that tethers extremely well with good
battery life, so I can just pair it with a small tablet when I want the extra
smartphone features.

I don't imagine that costing too much, so it might fall within any acceptable
loss they have built in to their products. Then again, it would have less
capability to generate revenue for them, unless it changed data that passed
through it (replacing adds, etc), which would be pretty horrendous.

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SifJar
Free, without a contract? Surely then everyone who hears about it will order
one, and 99% won't even use them? Or am I misunderstanding and this is "free
with a XX/month contract"? In which case, big deal - here in the UK you can
get pretty much any brand new, top of the range phone for free if you get an
expensive enough contract.

It's certainly something I'll be keeping an eye on.

EDIT: Also, they have to realise that it'll be rooted and have Google apps
installed on it within days, thus loosing their "guaranteed" revenue stream...

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Lost_BiomedE
Telco termination fees have been, and are becoming much more so, a hindrance
to innovation. The technical part of telcos should have been turned into dumb
utilities by now, with the big providers as mere resellers. Thanks, Michael
Powell.

~~~
scholia
They might be a hindrance in the USA but not in most of the world, where pre-
pay and rolling one-month contracts are common. It means there's a big market
for good cheap phones among people who won't or can't pay $700 or $900 for an
iPhone 5, and still want this year's model.

The South Korean government banned contracts for being anti-competitive, which
gave a big boost to Samsung and LG. Now Chinese firms like Lenovo, Huawei and
ZTE are benefiting as well.

This is why Apple has no real choice about doing a cheap iPhone. Contracts
mean it can dominate the US market while making huge margins, but the rest of
the world is going Android.

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abruzzi
in the claim that this is apple's worst nightmare, they jump very quickly to
the implication that this will be a high end device.

"It is also shows that Apple’s worst nightmare may be coming true: prices
could fall not just for cheap phones in developing markets but higher-end ones
too."

But there is no discussion of wether this really is a high end phone. Looking
at existing Kindle tablet, I'm going to guess that it will be mid-range or
upper low end, depending on how you define those terms. Free low end could
force prices down on the high end, but thats not really a slam dunk case.

~~~
gutnor
Well that would certainly be a nightmare for Apple if Amazon was coming with
the equivalent of a Galaxy S4 for free.

But I'm not quite sure that Apple would be the worse off compared to others. I
does not really matter whether or not a brand has current plan for the low
end: if people expectation are set to high-end phone == free, I'm not sure why
they would want an low end phone unless what, you pay them ? What really
matter is what brand has an alternative way of funding those phones. IMO that
means killing "open" Android, anything open really.

Apple can still rely on the App Store and its walled-garden. MS tiny
markeshare will probably make them give up under the risk of bleeding to
death. Samsung has enough marketshare to build its own walled garden. Google
would have some thinking to do, I'm sure other brand will start to question
how valuable their client really are for Goolge. As for the rest of the
Android player, RIM, ... well good luck.

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jjsz
I hope Claro follows, for people that would like to break off their contract
of a i9300 or any top-tier Android phone. They charge $600 even if you cancel
on the last month with them.

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vondur
Since Amazon doesn't seem to care about profits at this point, I suppose they
can pull it off. Not sure how'd it work without telco involvement. Wifi only
maybe?

~~~
AsymetricCom
The Kindle Fire 4G offered a limited time data-plan that was like $50 one time
fee for 6 months of 10gb@month. I imagine they would like to have some kind of
data plan that hitches on you buying apps and content and having that
subsidize the data plan somehow.

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Raphmedia
... I already get pretty much any phone for free with a 2 or more year plan.
How is this different?

~~~
darren_
Over in Japan (only experience I have of contract-cellphone-ownership) it is
spelled out very clearly when you start a 2-year cellphone contract with a
0-yen upfront phone that you're actually buying the handset over a period of
24 months and the cost is x yen per month (and this is broken out in your
bill). Do they not do this in the US?

~~~
rprospero
Imagine that you're heading out to a restaurant for dinner and getting a nice
plate of nachos. However, at the start of your meal, you pull out a big bag of
tortilla chips. You then tell the waiter that you've brought your own chips
and don't want to use the restaurant's chips. I've known a couple of friendly
restaurant owners who would agree to something like this (e.g. for allergies),
but not one of them would have given a discount for it. The meal comes with
chips, even if you don't want them or eat them. You're going to pay for their
chips, even if you bring your own.

Most of the US phone carriers have the same attitude towards phones. Your
cellular contract comes with a phone. If you want to bring your own phone,
that's fine, but the price is going to be the same whether you use their phone
or your own.

Thankfully, some of the smaller carriers are moving away from this attitude,
but bringing your own phone can still be a major pain. After all, the only
thing better for a salesman's commission than selling you an expensive
contract in exchange for a phone is selling you that same contract and not
giving you a phone.

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Zigurd
Amazon has a media-oriented ecosystem. The advantage is that Amazon customers
spend directly on products that Amazon sells at retail. The disadvantage is
that it doesn't cover the same suite of services as Apple, Microsoft, or
Google.

I have not been attracted to Amazon's Android-based devices because I would
rather have the more-general suite of services provided by Google. But I can
see people making the opposite choice.

