Kindle Phone Release Date September 2014 (WSJ’s Kindle Phone Leak)

Kindle Phone is arriving September 2014, according to the Wall Street Journal’s Kindle Phone scoop. It is, unfortunately, a subscribers-only article. However, you can read up on the Kindle Phone below.

Kindle Phone Release Date – Kindle Phone announced in June, available by September 2014

WSJ has made the following claims -

  1. Kindle Phone is currently being shown to developers in San Francisco and Seattle. Perhaps to generate enthusiasm and apps.
  2. Kindle Phone will be announced in June 2014.
  3. Kindle Phone will be shipped in September 2014.

Interesting that the dates would be so specific. It seems some of the developers who were shown Kindle Phone broke the Confidentiality Agreements they perhaps had to sign. Or perhaps it’s just Amazon doing a controlled leak to gauge interest in a Kindle Phone.

It’s strange that there’s nothing about what it looks like (hopefully not a bland brick with less soul than a McDonald’s Burger). What features it has (after the first 5 minutes the 3D won’t seem that impressive). What the price will be (3D doesn’t sound cheap, does it).

Kindle Phone Details – What will Kindle Phone be like?

WSJ has made the following claims -

  1. Kindle Phone will have 3D technology. There will be 4 cameras at the 4 corners and they will track your retinas and create a 3D/hologram type image for you. Apple is getting its lawyers ready – how dare anyone else build a phone that employs users’ retinas.
  2. Kindle Phone Release Date is mentioned earlier – end of September 2014.
  3. Amazon will reveal all the details on Kindle Phone in June.

June announcement and end of September Shipping Date. A bit strange, no?

Why announce Kindle Phone 3 to 4 months before it ships?

My assumption is that Amazon has no idea of how much demand there will be for a Kindle Phone with 3D.

  1. 3D is a technology that hasn’t really taken off. 3D TVs have failed miserably. 3D hasn’t really taken off in video games either.
  2. Amazon probably has a decentish idea of demand for phones thanks to its Amazon Wireless subdivision (which sells phones and phone plans). However, there are no 3D phones yet, so it can’t predict demand for Kindle Phone 3D with a high degree of confidence.
  3. A 3D Kindle Phone is highly unlikely to be a ‘budget smartphone’. That means demand will be driven primarily by whether people find the idea of a 3D phone appealing and are willing to pay for it. We aren’t talking about a $0 Kindle Phone with 6 months free service – that would sell like hot cakes at a Marie Antoinette clone production center.

Amazon’s only option to gauge demand is to announce the Kindle Phone, take pre-orders, and estimate actual demand based on the preorders. The last thing Amazon wants is to end up with 3 or 4 million retina-tracking, 3D manifesting Kindle Phones rotting away in shipping containers in some remote part of China.

It’s a bit strange that Amazon is going all-out with 3D. It certainly seems like Amazon is betting the house on their 3D technology. If you had to release a Smartphone, in today’s crowded market, would you really bet on 3D as the one killer feature?

Will 3D make a Difference for Kindle Phone?

The short answer - probably not.

The long answer – Sometimes a company falls so in love with a product idea or a feature that it can’t see the user benefit side (or doesn’t care). What benefit does having a 3D phone bring for users?

You can watch Candy drop in 3D? Your email’s letters are in 3D? You can farm your virtual farms and watch the corn grow in 3D?

You can turn on the screen and a giant neon 3D ‘Look at Me. I’ve got a 3D Phone that I never use the 3D on.’ sign flashes for everyone else to see how cool you are?

Perhaps Amazon will show that the 3D TV people were doing it wrong and that 3D works great if you don’t need glasses. Perhaps it’ll turn out to be a gimmick that no one cares for. Perhaps it’ll be a feature that gets users to buy the phone (whether or not they use 3D afterwards doesn’t matter to Amazon).

Let’s discuss things that would make a Kindle Phone worth buying.

Kindle Phone Wish List

Well, here are a few things -

  1. A reasonable price.
  2. A very reasonable data plan and WhatsApp or Kik or Line integration so no texting costs. Probably leave out WhatsApp since it’s going to get Facebook’ed now.
  3. Something that’s beautiful, not a brick that looks like Mr. Boring-but-Safe was put in charge of design.
  4. Something that’s super easy to use.
  5. No Ads. Please, for the love of God, no ads that are everywhere like annoying gnats. No Ads means No ‘Special Offers’.
  6. Light Weight.
  7. Large Screen, but not so large it’s a Tablet.
  8. Multiple Models – Perhaps an option for a cheaper Kindle Phone that doesn’t have 3D.
  9. Availability internationally.
  10. A very good set of base function apps. The Email and Phone and Messaging Apps should be rock-solid.
  11. What else?

No, 3D isn’t on the list. 3D isn’t some magic bullet that will win Amazon a place in the Smartphone Top 3. Amazon will have to make a really good phone.

What will Kindle Phone be called?

Calling the Kindle TV ‘Kindle Fire TV’ is a bit of a strange choice. Why not just call it KTV or Kindle TV or something short and sweet.

Hopefully Amazon stays away from a convoluted name for Kindle Phone. ‘Kindle Fire Phone 3D’ is too long and complicated. ‘Sets your Retinas on Fire’ Kindle Phone – yeah, that’s out too.

‘Kindle Phone’ has a nice ring to it. Just two words. No need to add a bunch of things.

Given Amazon’s past history, expect Amazon to choose a name by jumbling together suggestions from their copywriters. Something absurd like – Kindle Fire Phone 3D with Hologram 3D and Shark Guardians with Lasers.

Can Kindle Phone with 3D compete against iPhone & Samsung Galaxy S5

We’ll have to wait and see what the Kindle Phone is actually like. 3D by itself is unlikely to sway users.

What’s interesting and encouraging is that Amazon is releasing a Kindle Phone, Amazon is releasing Kindle Phone in 2014, and Amazon is taking a shot at making something NEW and INNOVATIVE.

Kindle Phone won’t be $0. Kindle Phone will be $0 with $0 Data Plan

Firstly, much thanks to Roger Knights for connecting most of the dots. Kindle Phone is a pretty big deal for Amazon. Let’s consider four data points -

  1. Mobile is HUGE and it’s completely taking over. Companies that don’t transition to mobile are dying. Amazon understands this. The rise of Smartphones and Tablets demonstrates just how important mobile is.
  2. Companies that control the phone and/or the network can destroy everyone else, if they so choose. What if Google starts selling more things and subtly removes Amazon from its Android ecosystem?
  3. Amazon is already testing a wireless network using Globalstar Spectrum. If that isn’t enough of a clue - It’s Lab 126 (the Amazon subdivision that made Kindle and Kindle Fire) that is doing the testing. That just screams Kindle Phone. Globalstar is pushing forward its plans (thanks to Roger Knights for this link and the idea that Amazon will use Globalstar’s spectrum to launch Kindle Phone).
  4. Amazon has come out to deny that Kindle Phone will be free and claimed that it won’t arrive in 2013. That’s the first time in the last 4-5 years it’s made specific and tangible claims about any of its devices or products.

All of this points to one simple thing -

Kindle Phone is critically important to Amazon. Amazon understands this very, very well.

Kindle Phone might very well dictate Amazon’s future prosperity

If everyone switches from the Internet to Mobile, and this transition is well underway, Amazon goes from having the ‘free and easy to access’ Internet to being dependent on different people’s ecosystems.

You might think – I’ll still type in Amazon.com. So will everyone else.

However, people are slaves to the power of the default. Slaves to convenience. Amazon understands this – that’s why it has Amazon Prime and 1-Click buttons and other ‘convenience handcuffs’.

Apple and Google and Microsoft control the ecosystems and they control everything. Combine this with the shift from physical to digital (movies, music, video games, books) and we suddenly have a recipe for disaster -

  1. Amazon controls less than 10% of the Mobile Ecosystems. Perhaps less than 5%.
  2. More and more of Amazon’s sales are shifting to digital.
  3. More and more of the Ecosystems are selling the same things. Apple sells movies and music and books. So does Google. So does Microsoft. So does Sony. So does B&N (movies and books). Every ecosystem owner wants to control the profit streams and the revenue streams.
  4. Amazon is suddenly in no man’s land – The Ecosystem owners want to sell to their users themselves. Often, they want to sell the exact same things to their users that Amazon does. They have no incentive to bubble up Amazon’s websites and apps to the attention of their users. In fact, they have an incentive to hide them. That’s precisely what Apple and Google are doing (in subtle but powerful ways).
  5. The only solution for Amazon is to build its own Mobile Ecosystem.

Unfortunately, so far, Amazon doesn’t have much in the way of a thriving ecosystem.

Amazon needs a Big Ecosystem and Kindle Phone might be its last chance

Kindle – Only books. Limited market.

Kindle Fire – Decent #2 in the Tablet Market for a while. Then Samsung took #2. Now Windows 8 based tablets might push Kindle Fire to #4 or even #5.

Please Note: we’re talking about the DOMINATING online retailer Amazon.com. It can’t survive if it has the 5th biggest mobile ecosystem. It simply can’t.

What does that mean?

That means Amazon needs to find a way to add HUNDREDS OF MILLIONS of users. Not the 10 million or so users Kindle offers, or even the 20 million or so users the Kindle Fire offers.

Amazon needs to find a way to add Hundreds of Millions of users to its ecosystem.

Kindle Phone is the only solution.

A $0 Kindle Phone with a $0 data plan has the best shot.

Given how late Amazon is to the party, Kindle Phone might be its last shot.

$0 Kindle Phone with $0 Data Plan

That’s Amazon’s Hail Mary.

Android is getting to billions of users (with perhaps 100 to 200 million users of good intent). Those are all Google’s users now.

Apple has 100 to 250 million users of good intent in its ecosystem.

Microsoft has somewhere between 50 million and 150 million users. However, it is growing fastest in terms of users of good intent and might end up dominating.

Amazon can’t depend on users from those ecosystems because Apple and Google and Microsoft control EVERYTHING there.

Amazon’s only hope is to find some rapid-fire means of reaching 100 million+ users of good intent. It’ll have to pay a very heavy price. Whatever the price, it’s a lot better than hoping that Google and Apple and Microsoft will treat Amazon like their best friend and allow Amazon open access to their ecosystems and their users.

They won’t. They already aren’t.

The question isn’t – Will there be a $0 Kindle Phone with a $0 Data Plan?

The real question is – Will a $0 Kindle Phone with a $0 Data Plan be enough to save Amazon?

Kindle Phone not free, Kindle Phone not in 2013 – Amazon makes two Kindle Phone claims

Amazon has spoken on the Kindle Phone. The same company that refuses to divulge figures and uses stupid comparisons like ‘we sold as many books in August 2013 as there are baby Anacondas in the Amazon rainforest’, is suddenly pretending to be forthright and non-deceptive.

A quick reminder - Amazon is the same company that refuses to divulge any information about itself or its products. Would you like to know -

  1. How many Kindles have been sold?
  2. How many Kindle Fires have been sold?
  3. How many Kindle books are sold every month?
  4. How many Kindle Fire apps are sold every month?
  5. How many Prime subscribers there are?

Well, sorry. All of that is ‘too important’ and would give Amazon’s competitors too much of an edge.

Yet, when it comes to the Kindle Phone, Amazon has come right come out and claimed that -

  1. Kindle Phone will not arrive in 2013.
  2. Kindle Phone will not be free.

Suddenly, Amazon is a paragon of openness and transparency.

This strange new transparency suggests Amazon is worried about something. There are two main possibilities -

  1. Kindle Phone is arriving for free and Amazon is worried its competitors will be able to out-strategize it. So it’s moved to deny the free Kindle Phone rumor. When it arrives, Amazon will just claim it changed plans.
  2. Kindle Phone is not free and can’t cope with the expectation of free. Amazon is worried that customers will be disappointed if Kindle Phone isn’t free. Amazon is managing expectations.

It’s really interesting that Amazon would claim there’s no Kindle Phone scheduled for 2013.

I can understand the concern about the ‘Free’ price. Why deny a Kindle Phone is arriving in 2013? Why be so specific about dates?

  1. The first possibility is that Kindle Phone is arriving January 2014 or February 2014. Amazon wants to make its competitors think they have until Fall 2014. Subtle misdirection.
  2. The second possibility is that Amazon is worried that companies like Samsung and Nokia will be able to figure out how to fight a free Kindle Phone. It’s hoping to give them a false sense of ‘time cushion’. A sense that the free Kindle Phone isn’t arriving until Fall 2014 and they have all the time in the world to prepare. Then, in late October 2013, the free Kindle Phone arrives – Surprise!

Based on Amazon’s excellent history of openness and transparency, we can conclude -

  1. Amazon saying ‘no free Kindle Phone’ most probably means there will indeed be a free kindle phone.
  2. Amazon saying ‘no Kindle Phone in 2013′ most probably means there will be a Kindle Phone in the next few months (latest by February 2014).

Amazon just confirmed that something big is up with Kindle Phone. Thanks Amazon!

Free Kindle Phone – Amazon Kindle Phone might be free

Jessica Lessin has an interesting article about the Kindle Phone. In particular, she says that Amazon plans on releasing the Kindle Phone (perhaps it’ll be called the Amazon Phone) for free.

Reasons why a Free Kindle Phone is likely

  1. If the only tool you have is a hammer, then everything seems like a nail. Amazon’s main competitive differentiators are cheap prices, wide selection, and great customer service. Entering a competitive market like Cellphones, Amazon’s wide selection don’t matter much (there will be just one Kindle Phone) and the great customer service doesn’t matter much either (Apple already has great customer service). That leaves just price. Of course, Amazon could innovate and create a new competitive advantage. However, it hasn’t shown this ability with either Kindle or Kindle Fire. When it comes to hardware, Amazon’s weapon of choice seems to be ‘low prices’ and ‘sell the razors for cheap, make money from the blades’.
  2. Amazon, via its Amazon Wireless offering, already sells phones and wireless plans. Among the most popular features (demonstrated via the amount of buzz they get) are the ’1 cent Phone’ and ’1 Dollar Phone’ special weekends. It must be abundantly clear to Amazon that nothing sells a phone quite like low prices.
  3. Amazon is late to the game and needs an edge. It’s really tough to get an edge if you’re a very late entrant. Amazon’s ability to eat costs upfront is one real and tangible advantage it has and can leverage.

We’ve wondered in the past – How will Amazon differentiate?

Perhaps it’s the same way that Xiaomi differentiates in China – offer a really high quality phone for a very low price that doesn’t make any/much profit. Hope to make money from services.

Xiaomi? That’s the Chinese luxury phone company (priced at non-luxury prices) that sold more phones in China than Apple last quarter.

Reasons why a Free Kindle Phone makes sense for Amazon

  1. Most Importantly – There might not be another way. Amazon’s ecosystem (free apps, cheap apps) is way, way behind Android. Amazon’s ecosystem (quality apps) is far behind Apple. Amazon hasn’t shown the ability to make the best or most beautiful hardware. Amazon can’t really make super high quality software. What’s left?
  2. Amazon already has customers that are attuned to cheap and free. Guess what people who download all those ‘Free App of the Day’ Apps and read all those Free Kindle Books would gladly eat up? A Free Kindle Phone.
  3. It becomes another important customer acquisition device for Amazon. Not to mention another loss leader that allows Amazon to channel profits from profitable business subdivisions to customer acquisition.
  4. Free ought to work. Apple and Samsung have shown that subsidized smartphones work much better than unsubsidized ones. If that’s true, then it’s probable that free will work even better.
  5. Amazon can make up the money in other ways. A customer acquisition is worth a lot more to Amazon over the lifetime of the customer relationship than most other companies. Samsung can perhaps sell a customer another phone, a tablet, a SSD, a TV, and that’s it. Amazon can sell EVERYTHING to that customer.

Strange as it may seem, it actually makes more sense for Amazon to go with a free Kindle Phone than a paid one. At least with a free Kindle Phone Amazon won’t be left high and dry with a few million unsold Amazon Phones. Having to pretend it ‘optimized’ and ‘achieved economies of scale’ and that’s why you see a 25% lower price 5 months after launch.

Disadvantages of releasing a Free Kindle Phone

  1. [Amazon might consider this an advantage] The Phone sales themselves won’t make any profits.
  2. [Again, this might not seem a disadvantage to Amazon] You have to focus on ‘decent’ rather than ‘great’. A Free Kindle Phone would be at least $100 to $200 cheaper to make than an iPhone or a Samsung Galaxy. That reduced spend shows up in a lot of cut corners and a distinct lack of polish. Hopefully we won’t have cardboard casing made from discarded Amazon warehouse packaging (it is more ecofriendly than brushed aluminium).
  3. You can’t compete on the high end. Amazon is probably not interested in this at the moment. Note: Amazon will try the ‘Best Phone Available … at any price’ marketing trick. However, that has more to do with getting free publicity from Apple and/or Android worshipping press who will take umbrage at the claim.
  4. You pretty much entrench yourself as the ‘Free & Cheap’ company. Perhaps Amazon doesn’t fully get it yet. There’s not really an easy way to undo all the training it’s doing. Cheap prices. Free Shipping. Free Kindle Books. Cheap Fire Tablets. It’s digging itself more and more into the ‘Free & Cheap’ hole. Perhaps that is exactly where Amazon wants to be.
  5. You have no leverage. What if Kindle Phone doesn’t do so well. What ‘sales and deals’ will Amazon offer? Buy it and get $100. This already happens with old smartphones. However, it would be a real deathblow if Amazon had to give people money to take their Kindle Phone.

Amazon is gaining a big strategic advantage (if it does, indeed, go with a Free Kindle Phone). It is also painting itself into a rather tight corner.

A Free Kindle Phone. If Amazon delivers, it would have proven without a doubt it’s the craziest company around. Perhaps you don’t need Cash Cows if you have enough loss leaders.

Kindle Phone Strategy – What Kindle Phone will Amazon release?

Rumors of a Kindle Phone have been circulating for over a year now. Releasing a Kindle Phone is a move that makes a lot of sense for Amazon. It can reach a lot more customers, it can sell them music and movies and games, it can sell them data plans, it can get them enrolled in Amazon Prime, it can sell Kindle Phones to its existing customers, it can strengthen its relationship with its customers.

With eInk Kindles and Kindle Tablets, Amazon has been polishing its hardware skills (perhaps not as much as we’d like). With a Kindle Phone it would go into what is perhaps the most profitable customer device business right now. Apple and Samsung have 57% and 43% of the profits right now (everyone else is negative) and it translates into $1 to $2 billion a month in profits for each.

That’s just a massive amount of money.

The huge profit opportunity creates an interesting quandary for Amazon -

  1. Should Amazon release a highly profitable, high-end Kindle Phone that might, conceivably, generate $1 billion a month in profits for Amazon?
  2. Should Amazon stay true to its DNA and release a barely profitable (or perhaps even loss-creating) Kindle Phone, that gathers a lot of customers for the Amazon ecosystem, and makes no profits?

Side Note: It would be truly epic if Amazon were able to create a loss-leader business in a smart phone market where Apple and Samsung are making $1 billion to $2 billion a month in profits each.

Amazon’s profits last year were – $676 million of operating income, $39 million of net loss. When you look at that, it’s easy to understand the temptation Amazon will face -

Let’s go into this market where Apple and Samsung are making $1 to $2 billion a month each from smart phone profits. Let’s blow it up. We might not make $1 billion a month in profits from it, but we’ll gather a lot of customers. As a side bonus, we’ll cut into Apple and Samsung’s profits.

Will Amazon be able to resist the temptation to destroy all that profit? Or will it finally focus on profits and capture some part of the immense profit available in the smart phone market?

What Kindle Phone will Amazon release?

Will Amazon release a Profits-Focused Kindle Phone?

Perhaps Amazon decides $1 billion to $2 billion a month in profits isn’t a bad thing. That God isn’t going to strike Jeff Bezos with lightning for embracing instant gratification.

Think of all the good Amazon can do with a Profits-Focused Kindle Phone -

  1. Push things forward in a big way. Motivate Apple and Samsung to up their game.
  2. Generate Profits. A lot of profits. Every single month. Actual profits – not just the promise of profits at some unknown time in the next few decades.
  3. Make something beautiful. It must be painful to make device after device that looks like it was designed by the same people who designed that matchbox of a car (the name escapes me).
  4. Get high-end customers. Customers who can afford a high-end phone and, this might come as a surprise, who have more money to spend. They will spend more money with Amazon if they buy a Kindle Phone. Surely, that has to motivate Amazon.
  5. Make something that’s really, really good. Polished, smooth, easy to use software. High quality, beautiful, durable hardware. Even spending $50 to $100 more per phone on hardware and software improvements would result in a massively improved Kindle Phone.
  6. Reach a lot of people who don’t really think of Amazon when they are looking for a device.
  7. Fill some of the gaps that are beginning to show up as Apple gets ‘Designered’ to death by Jonathan Ive. His design sense makes me wonder if he grew up in one of those fancy British castles with embellishments and tapestry and paintings everywhere. Now he just wants to ‘simplify’ and ‘flatten’ and ’round’ everything to escape from the demons of his childhood (please … please … no more trays laden with 11 types of scones and 7 types of butter knives). This is actually a really, really big opportunity. After Steve Jobs’ death both Apple and Samsung are devoid of inspiration and innovation (both iOS7 and Samsung Galaxy S4 are emblematic of this). Anyone who gambles and releases a really beautiful phone can walk away with a lot of the profits in the high-end phone market. When there is a void – someone fills it. Why not Amazon?
  8. Build a Cash Cow. Surely, it must grate on Amazon’s nerves that it’s the only big technology company that doesn’t have a cash cow. Forget its DNA spliced mutant Pig-Cow-Buffalo that will start delivering milk and Bavarian sausages and Bison Burgers in 27 years. There’s need for a cash cow right now.
  9. Excitement. So many boring product releases from Amazon. Who wants to sit through another announcement where the highlight is a 25% improvement in screen contrast. Give us something we can see and touch and feel. Not something that has to be pointed out to be noticed.

So many years of putting customer acquisition before profits. So many years of toiling away for the promise of something better in the distant future. So many years of making cheaper and cheaper things to get more and more customers.

There must be a part of Amazon that wants to make something beautiful and profitable and something that is ‘the best’. It’s only human to want to make something beautiful. How can anyone be happy making second-rate violins when you could be Antonio Stradivari or Giuseppe Guarneri?

Unfortunately, I fear that Amazon is scared of taking up the challenge. That it is happy to slave away at making inexpensive devices that have no significance beyond customer acquisition. Customers who might not generate profits and customers who might never experience the highest levels of satisfaction with their devices. It’s all just a numbers game.

Hopefully it proves me wrong and releases a state-of-the-art Kindle Phone 3D with Gesture Tracking and Holographic 3D displays in a package that makes people happy, and not just when looking at the price.

Will Amazon release an ‘Allergic to Profits’ Kindle Phone?

Perhaps Amazon just can’t fight its DNA. Amazon starts off on Kindle Phone and its ‘Allergic to Profits’ DNA latches on to Amazon like a baby Alien latches on to a careless space marine.

This is perhaps the thought process that Amazon will go through when making Kindle Phone -

  1. Let’s make the absolute best Kindle phone that we can make. But … what about the 6713 million people who would not be able to afford it.
  2. OK, let’s make a really, really good Kindle Phone. But … what about the 5817 million people who can’t afford that. They are all potential customers, no?
  3. Well, let’s make a very good Kindle Phone. But … what about the 3872 million people who can’t afford that. We are losing so much imaginary potential revenue. The pain. The pain.
  4. OK, let’s make a good Kindle Phone. I regret to say there are still 3154 million people we can’t acquire as customers. Let’s make a Kindle Simple Phone for them. Yay! What an idea!

So it goes from ‘The Absolute Best Smart Phone that money can buy’ to ‘The Smart Phone that the Absolute Most people can buy’.

It’s a subtle difference … well, not really. It’s as subtle as dropping a hammer on your foot.

That is probably what will happen. Amazon won’t be able to stop thinking of the hundreds of millions of people who need to be able to afford Kindle Phone. It will, therefore, deliver a phone that is precisely that – a device meant to easily acquire hundreds of millions of customers.

That means we get some sacrifices -

  1. You put in a processor that’s not quite cutting edge. Because $25 extra is too high a price for a silky smooth interface. We’ll just call the browser Silky Smooth and people won’t notice the difference (that Psychology 101 course sure comes in handy).
  2. You put in 1 GB of RAM instead of 2 GB. A phone doesn’t really need 2 GB anyways. Hey, perhaps we can save another $5 and get down to 512 MB.
  3. Screen. Do we use the 350 ppi $100 screen or the 190 ppi $35 screen? People can’t even see beyond 200 pixels. Easy decision.
  4. SD Card slot. Why? They will buy less from Amazon. Let everything stay in the clouds.
  5. 8 GB memory or 16 GB? Well, it’s an opportunity to save $20.
  6. Aluminium or Plastic or Cardboard. What is that you say – Cardboard won’t work. That’s unfortunate. We have a ton of empty cardboard boxes from returns we could use. Plastic it is – Aluminium is too shiny. We don’t want crows and ravens running off with people’s Kindle Phones.
  7. Spending money and time on polishing the hardware? But what about our design signature - boxy and sturdy and unsexy? It’s like bed-hair – it’s best when you don’t touch it much at all.

It’s death by a thousand price-saving cuts.

Of course, you do the get the ultimate customer acquisition device – a cheap Kindle Phone that has enough features to attract, but not enough quality or polish to thrill.

Will Amazon release both – a Profits-Focused high-end Kindle Phone AND a lots-of-compromises Kindle Phone Cheap Edition that targets the low-end market?

This might be the most interesting strategy.

Note: We do not mean the type of nonsense Amazon tried to pull off with the Kindle Fire HD LTE - where it added a LTE chip and priced a $299 tablet at $499. We mean an ACTUAL high-end Kindle Phone.

Here, Amazon would say -

  1. We have a huge chunk of our customers who expect us to take losses and/or make zero profits on device sales. Let’s cater to them with a slightly cheaper Kindle Phone. It’ll be impressive and pack a lot for the price. However, it won’t be high-end.
  2. We have a market that is helping Samsung and Apple make $1 to $2 billion a month in profits each. Let’s target that market using a high-end Kindle Phone built with zero compromises and built with the belief that ‘the device sale is the only thing we care about’. None of the advertising stuff that people who buy low-priced stuff are OK with. High-end customers don’t want subsidies - they just want quality.

This would, obviously, be much tougher than the earlier two options. However, it has several important benefits -

  1. Amazon can target both the high-end and the low-end markets. This is something that should not be under-estimated. A lot of the device profits are in the high-end. A significant portion of the ongoing revenues (though not necessarily profits) are in the low-end.
  2. Amazon can actually build a profit stream using the high-end Kindle Phone. It’ll be a shock to Amazon (and to everyone else), but it’ll be well worth it. Imagine that - a company used to making next to zero profits making a billion dollars in profit each month.
  3. With the low-end Kindle Phone Cheap Edition, Amazon can continue its DNA-dictated policy of taking losses up-front for the promise of future profits, which can then promptly be ploughed back into other ‘taking losses up-front’ businesses.
  4. Amazon doesn’t know which will work. Perhaps Amazon finds that it’s better suited to the low-end of the phone market. Perhaps it finds that the high-end market is a lot more promising than it realized, and that it can play with the big boys.
  5. It means more customers. There’s no reason to leave out people who are willing to pay a large amount up-front. Ignoring those customers is just wrong.

Perhaps it’s time for Amazon to explore more high-end businesses. Focus more on profit-generating customers. Focus more on customers who generate profits from the get-go.

It might be time for Amazon to focus on Profits

Amazon seems intent on entering the smart phone market with Kindle Phone. It would be entering at a time when the smart phone market has shown it can generate an incredible amount of profits – not just for Apple and Samsung, but also for wireless carriers and also for anyone who can deliver the hot new smart phone.

Amazon has an opportunity to tap into the billions of dollars of monthly profits the smart phone business is generating for smart phone makers. It can focus on profits and make a lot of money. It’s a market that has shown it can support multiple winners. Amazon doesn’t have to take losses. Amazon doesn’t have to spurn profits. Amazon doesn’t have to attack Apple or Samsung on price.

Amazon has a market where it can profit greatly. Let’s hope it focuses on Profits.

At some deep level, Amazon seems to not really understand that people who can generate profits up-front are LIKELIER to generate profits down the line. It has this belief that it can attract people who want cheap and free and then miraculously transform them into profit centers. Well, after 15-20 years of fighting reality, perhaps it should embrace reality.

If Amazon is courageous, and makes an excellent high-end Kindle Phone, it might be surprised by what it finds. While it’s harder to sell high-end devices that aren’t sold at a loss, it results in customers who generate a lot more profits. As a bonus, they generate profits both at first sale and afterwards.

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