Fast Take: Amazon's Smartphone

Rumors that Amazon was planning on entering the smartphone game have circulated for quite some time. Amazon's operation, however, is very well locked down, so little real data leaks out ahead of its press events—and the relatively smallish scale of its operation means there's less scrutiny on component leaks from China.

But now The Verge has heard from "multiple sources" that Amazon really is working on a phone, and that it'll be shown to the press at Amazon's event later today. It's said to be unfinished, so it's likely that we'll simply get a teaser of what Amazon's up to.

Below, we try to work out the details.

Why An Amazon Phone?

An Amazon smartphone makes great sense. Amazon has quickly upset the Android applecart in the U.S. with its Fire tablet, stealing a biggish chunk of the market (although trailing very far behind the iPad). The Fire is probably close to being a loss leader in terms of hardware, but because it is so very tightly leashed to Amazon's content farms it works as a perfect revenue generator as users buy movies, apps, and books from Amazon's store.

Expanding this business model to a phone would enable Amazon to sell many more apps, movies, and so on. Partly because right now the phone market is much bigger than the tablet market and possibly because they could sell the phone for even less than the Fire tablet.

What Amazon's Done Already

Amazon's amassed much expertise in hardware manufacturing in its Kindle line of e-readers, and more recently in the Fire tablet. Taking this expertise and making a smartphone would be relatively easy, and remember Apple spent time developing the iPad before pivoting its R&D process and making a phone.

Amazon also is said to have bought UpNext, a small U.S. startup that produced clever 3-D mapping tech as apps for the iPhone, iPad, and Android devices. Map tech like this could augment raw map data from another provider to create a powerful navigation solution.

Amazon has also recently hired a former Microsoft Windows Phone exec, and is looking to hire patent executives to help its expansion by identifying and acquiring relevant IP.

What We Might And Might Not Expect To See

Amazon's phone will run a forked version of Android, beneath Amazon's own skin—an evolution of the very thickly skinned Android OS that ran on the first Kindle Fire, and which is all but disconnected from Google. The phone's maps may come from a third-party supplier. And based on Amazon's 3-D mapping purchase they may include smart 3-D powers to compete with Google and Apple (which is also going its own way with Maps). The third-party maps supplier may be Nokia.

The phone will likely be very simplistic in terms of design—a pure plastic and metal rectangular slab with an all-touchscreen face, pretty much following the vogue set by the iPhone.

The design simplicity is part of what we suspect may be Amazon's real plan: a very low cost phone that, like the Fire, is mainly designed to deliver content from Amazon's movie/music/apps stable, versus being a full-featured Android device. Don't expect super-high-res screen tech, or LTE, as these components up the build cost and would pitch the Amazon phone against the iPhone and high-end Androids, where it would be a small fish in a big pond. Limited on-board storage will also keep the cost down, and encourage buyers to purchase SD card expansion from Amazon's own electronics store.

Don't expect to see the phone overseas, necessarily. The Fire was a U.S.-only device, most likely because Amazon didn't want to spend money and time procuring international rights to content from multiple copyright holders in different nations—a maneuver it would have to pull off, lest the Fire would lack its critical content. And without content, the device wouldn't make Amazon much money at all.

While Amazon has been quietly expanding its digital hardware operations overseas, it's never really bitten down on the task. That said, it's possible Amazon may try to launch a smartphone at least in places like the U.K., where it's made more of an effort with its app store and e-reader hardware.

What We Fantasize May Happen

Amazon may try a novel payment model for its phone. If it made the phone free with a subscription to its Prime service, it may secure many U.S. buyers, and could set a dramatic precedent for the rest of the low-end smartphone market. If Amazon also toys with making the phone pre-pay for voice and data rather than an on-contract device, which would require negotiations with U.S. networks, this could also help popularize this system in the U.S. (it's already popular in many other countries).

If Amazon also expands on its Whispernet system, which allows free download of some content over 3G on its Kindle devices, it could tempt even more buyers who may otherwise be wary of paying for lots of 3G data. Amazon has just about enough might to upset the traditional phone network's stranglehold over data and fees, and this would be a welcome trick—it may even prompt a little more competition for customers keen to consume data on the move.

[Image: Stanislav Komogorov via Shutterstock]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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