
How Amazon Can Disrupt Smartphones and Take Apple & Google to School - robertbud1
http://www.xconomy.com/national/2012/07/10/how-amazon-can-disrupt-smartphones-and-take-apple-google-to-school/
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gavinlynch
tldr; Amazon will give away a free phone because.... Wait. The author never
says how this will work, why it will work, et cetera.

"I’m not sure if even Amazon can afford to play the free card...". So he's
introducing an idea the author himself is 100% unsure of, with only a vague
throw-away reference to anything remotely resembling an idea of how to make a
profit off of this device.... For what reason? Because "it's a classic Bezos
play". Okay. Whatever. Sorry for being flippant but almost every single
"point" brought up makes zero sense. I think this article is just mental
masturbation about the concept of a "free" phone.

~~~
seiji
Holy lack of reading comprehension, batman!

Chris says how it'll work in big bold letters: _So what is Amazon's secret
weapon in the smartphone battle? I'm betting it will be Jeff Bezos' favorite
play: miniscule margins + massive patience._

Summary of how he says it could work: by taking the device and carrier
selection out of the equation, Apple is cut off at the knees (for everybody
who doesn't care about their phone). It gobbles up anything non-Amazon Android
related, because those people are just getting free or cheap phones anyway.

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pdenya
Price conscious consumers are already drawn to android. Even if a free amazon
phone was a decent android device it's unlikely that apple would care. And if
it runs android isn't that still good for Google?

tl;dr - If amazon releases a phone it'll be android, low cost and good enough.

~~~
seiji
It's not about the device, it's about the service. Amazon could grab 30
million customers instantly with this plan: _If you take these ideas to their
logical conclusion, it's not hard to imagine Amazon pulling the biggest move
of all: giving away a pretty good smartphone, along with unlimited voice +
data, completely free._

~~~
runako
Since the author didn't feel compelled to even sketch the economics of how
Amazon could do this, we have to assume he has no idea if/how this would even
work. Given that, why not also assert that Apple and Google and Microsoft
could give away smartphones free with unlimited voice + data?

In a world where unlimited voice + data + low-cost phones can profitably be
given away free, why would Amazon be the only company able to do so?

~~~
seiji
It was fairly plainly stated in the article:

 _So what is Amazon's secret weapon in the smartphone battle? I'm betting it
will be Jeff Bezos' favorite play: miniscule margins + massive patience._

 _Apple makes most of their money from the consumer at the time of device
purchase; their media and app businesses are low-margin service lines that
feed and sustain their high-margin device sales._

 _They way they see it, if they hold on to that customer relationship long
enough, they'll always make up the lost margin in customer lifetime value._

~~~
runako
That's not economics, that's magic. For comparison, note how the author
indicates specifically Apple's economic strategy:

make money on device sales + encourage more device sales by making less money
on media and apps

Note that all of the numbers in the Apple strategy are positive.

There's nothing comparable for his Amazon suggestion. "Miniscule margins +
massive patience" works when price > 0, for all existing Amazon product &
service lines. Applying that formula using negative margins doesn't work.

It's one thing to say Amazon can make money on volume by selling TVs for
razor-thin margins. It's something entirely different to suggest they can make
money giving away $200 smartphones + $350/yr voice & data plans free in
perpetuity. That's the part the author conveniently skips over.

~~~
seiji
Oh, I see where you're coming from. You're right if we limit the ecosystem to
just phones, phones, phones.

But, Amazon is kinda everything in the frigging world. The amazon phone would
(obviously) tie to your amazon account. You could instabuy anything. They
would make buying things from Amazon a first class feature of the device.
Having the device (much like having Amazon prime) would mean you most likely
spend more through Amazon.

I admit it's a magic fairy dust line of thought, but it's still quite
compelling.

 _Suru, I need more toothpaste by Friday._

 _Same kind as last time, sir?_

 _Yes, Suru._

 _By your command._

------
swang
Remember how Kindle Fire was going to totally disrupt Google and Apple as
well?!

~~~
drivebyacct2
And at least with the Kindle Fire it made sense because it could be focused on
the book reading aspect of Kindle and provide a better experience than stock
Android + stock Kindle.apk.

Now Google has a decent e-book offering, a solid, similarly sized tablet _and_
there really isn't as large of an "Amazon media" leverage advantage with a
phone offering (specifically because of the form factor, that is).

~~~
ddw
My wife (not tech savvy) is in the market for a cheap tablet. I compared the
Fire vs. the Nexus 7 with her tonight. She's only remotely thinking about the
Fire because we have Amazon Instant w/ Prime. I'm trying to persuade her to go
w/ the Nexus 7 so that it'll at least last for a while.

I think the hardware and services have flattened out enough that the only
thing that matters anymore is the OS. And Google is winning that race against
Amazon.

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ddw
What an awful, buzzwordy article.

"Google tried this scorched-earth policy with Android, but in doing so lost
control of the ecosystem—as the Amazon fork demonstrated so forcefully." -
What does this even mean? Yes, open source means that even your competitors
can use it. But there's quite a software difference between Amazon's version
and Jelly Bean while the cost of the Fire vs. the Nexus 7 is $0. I don't think
Google's too concerned about Amazon's "forceful" fork.

I don't see Google having problems matching Amazon on its price. The
difference is that if updated properly, Google's Android will always give a
better experience. If you aren't tied to Amazon Instant, why would you NOT go
w/ the Nexus 7 over the Fire?

Same thing for the smartphone IMO.

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RobotCaleb
Sites with bars over the content break my ability to read them well by paging
down. On this site if I page down the very top line is the previous page's
half-rendered bottom-most line. :(

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stcredzero
They don't even need to play the free card, if they can come up with some kind
of bundling deal. 50% off a decent smartphone with $30/month unlimited web &
text with 1000 free minutes could be a dynamite deal for most folks. (Even if
it's throttled after a gigabyte or so.)

You don't have to be free for the strategy outlined in the post, you just have
to be too good to pass up. (Much like: A decent tablet for only $200.)

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flazzarino
Could this be a paid leak?

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shpoonj
'Disrupt' now means 'force adverts and consumerism instead of create value' in
case you didn't know.

The author has a grim view of the future and wants to run toward it... is this
normal?

~~~
victoro
Assuming what the author says actually ends up being Amazon's strategy, I
think bringing in a dirt-cheap smartphone option and thereby accelerating the
movement of another class of consumers (many of whom are probably still using
feature phones) onto the mobile web is pretty disruptive, if only because it
accelerates the adoption of the mobile web. The means -- forced
adverts/consumerism -- isn't where the value is, the end -- more mobile web
users -- is.

