Jeff Bezos and Amazon continue to disrupt
Amazon appear to have a strategy that is to disrupt and dominate niche plays. While the general headlines are focussed on market share of tablets, smart phones, PC’s etc, Amazon focus on those components that make them money. It is a strategy of giving those things that will drive their core business away for free.
It is not necessarily clear how free phones will drive Amazon ecommerce revenue yet, but I am certain Bezos sees a way. One thing I know is that its super handy for me to be able to read by latest book during off times on my phone which the Kindle app automatically syncs to furthest read page. My entire library is always in my pocket because that’s where my iPhone always is.
The question becomes whether there is a group/ demographic/ niche that will generate sufficient revenue for Amazon that would cover the cost of a free phone.
It is not that much of a long shot. First the cost of a lower end smart phone is getting down to the $130 range. How much do you have to sell to recover that cost is an internal Amazon calculation, but that’s not a high barrier when compared to banks spending up to $1,000 or much more for a new client.
Next look at results to date with Kindle devices taking a consequential market share amongst tablets, and those Kindles are bought by customers.
Amazon use a forked version of android … their own walled garden that keeps Google Play at bay.
Amazon are infamous for their revenue growth matched only by their growth in costs as they spend now to drive future business.
For more on the smartphone strategies of the big players including Chinese companies that are taking a run at Samsung, see Jessica Lessin here.