Reports that originally surfaced last year are starting to take shape regarding Amazon’s development of a smartphone (Kindle Phone perhaps? Bonfire? Firecracker? Glowworm?) that will be offered to the public this coming November — just in time for Christmas sales. Amazon is reportedly working with Foxconn International, a Chinese mobile phone producer, to develop this Kindle phone. Rumors suggest that Kindle Phone will, in all probability, use Amazon’s own version of the Android OS.
Kindle Phone and Patents
Amazon needs to obtain the correct patents covering wireless technology to build a defensible device. They also need to avoid both time-consuming and costly lawsuits alleging illegal use of technology. To do this, Amazon recently hired Matt Gordon, the former senior director of acquisitions at Intellectual Ventures Management LLC. A quick look at Matt Gordon’s Linked In profile shows his current position as “General Manager, Patent Acquisitions and Investments at Amazon”.
While it might seem to be a big jump (going from Kindle e-readers to Kindle smartphones), closer inspection shows that the gap isn’t as wide as one would think. Amazon already has the foundations in place to make money from a smartphone. It has its own re-skinned version of the Android OS, an app store and marketplaces brimming with content.
Most importantly, it has brand loyalty amongst its consumers. Amazon customers trust Amazon.
Kindle Phone is part of a gradual shift to Amazon devices
Amazon is fairly new to the world of devices, starting with the release of the first Kindle in 2007 and building up to the Kindle Fire last year. Its success (moderate, but success nonetheless) in the tablet market has been the result of it getting in early and keeping prices low. The revenue Amazon expects to generate from content sales, including eBooks and movies and music, allows it to price Kindle Fire and Kindle lower than it otherwise would/could. Add on the sales Kindle owners and Kindle Fire owners make at Amazon.com (kitchen sink, meet big screen television) and we have quite a good setup for Amazon.
Of course, with a Kindle smartphone Amazon would be dealing with beasts of an entirely different kind. Wireless Carriers. While Amazon has been selling smartphones through the Amazon Wireless site, actually dealing with wireless carriers and getting them to push its own Kindle Phone will be an entirely different proposition.
The question is – Will Amazon go the traditional route? Will it perhaps become a Carrier itself? Will it purchase wireless service from the major carriers and bundle it with Kindle Phones like it currently does with the eInk Kindles?
Kindle Phone will arrive in a very saturated market
The market is already saturated with successful smartphone competitors. In the first quarter of 2012, Samsung and Apple together shipped out 77.3 million smartphones worldwide, according to the research firm International Data Corporation (IDC). Predictions from IDC last month revealed that cell phone shipments will reach 1.8 billion this year.
Is there room for Amazon? It seems like David taking on Goliath. David seems to be prepared — but it’s one heck of a battle.
While IDC says that smartphone growth will continue at a substantial rate for the next 5 years, they also see that 2012 will be the year that begins a major shift away from the Android and iOS and towards Microsoft‘s up and coming Windows Phone platform.
It will be interesting to watch the unveiling of the new Amazon Kindle Smartphone. I am also very curious as to what they will call the Kindle phone. Perhaps the Amazonian?
End note: Drew Herdener, a spokesman for Amazon, was asked about the Kindle Phone. He got visibly upset, gestured to the heavens, and claimed that no such thing existed. Then his phone rang, he pulled out his 4.7″ Kindle Phone, and he told his wife he’d be home for dinner as soon as these reporters stop asking him crazy questions.
CNN on Kindle Phone Rumors