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 -
- 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.
- 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?
- 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).
- 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 -
- Amazon controls less than 10% of the Mobile Ecosystems. Perhaps less than 5%.
- More and more of Amazon’s sales are shifting to digital.
- 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.
- 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).
- 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.
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?