U.S.-based online retail giant Amazon.com is set to unveil its long-expected first smartphone this week, and according to reports, service for the device will be offered exclusively by AT&T. The U.S. operator is already the sole service provider for Amazon’s Kindle devices. The forthcoming phone is expected to have innovative features, including a screen that allows 3-D viewing for certain applications, and to use a version of Google’s Android operating system that does not connect to the Google Play store. Users would have to buy proprietary apps directly from Amazon.
The high-end handset business, dominated by Samsung and Apple, is a difficult one to break into, so Amazon is taking on a major challenge with this bold move. For AT&T, though, the exclusive carrier arrangement, which extends its existing relationship with Amazon, would appear to be all upside. The Amazon phone, which is likely to have capabilities that set it well apart from its competitors, should help AT&T attract new customers—even among those who already have contracts with other operators but are curious about the hologram-like effects of the 3-D screen. Since the U.S. mobile market is currently in an intensely competitive period—with T-Mobile engaged in an aggressive campaign to take business away from number-one ranked Verizon and number-two ranked AT&T and third-ranked Sprint pursuing a merger with T-Mobile—any competitive advantage should be particularly prized.
As for Amazon, the company is well known for its willingness to invest money in devices in order to drive business to the products and services available through them. It has pursued this strategy with its Kindle e-readers and tablets and appears poised to do likewise with its smartphone. The apps for the phone will be created and marketed by Amazon, and the Amazon Prime music-streaming service will also likely be available through the phone. Finally, Amazon has traditionally kept its device prices low—at or near the break-even point. If it does so with the new phone, that strategy should help drive sales for the retailer while also helping AT&T attract customers who want a high-end smartphone without paying a high-end price.