Report: Amazon Will Be First to Offer Free Smartphone
Which technology company will be the first to offer a free smartphone is the question of the day.
Along with Amir Efrati, Jessica Lessin — a former reporter and editor for the Wall Street Journal — devoted the most recent post on her technology blog to analyzing that question. She learned through sources familiar with Amazon’s (NASDAQ:AMZN) business that the e-commerce giant is considering giving away its long-planned smartphone for free. Of course, whether it is financially feasible for Amazon to offer the device for free depends on several factors; for example, the company must be able to arrange favorable deals with hardware partners, according to the source, who, along with several other people familiar with Amazon’s smartphone initiative, expressed skepticism that the company would be able to sell the device for free, the blog post noted.
Complicating the company’s quest is the fact that it will be have to find a manufacturer that has not committed to producing only Android devices approved by Google (NASDAQ:GOOG). Already, Amazon’s Kindle tablet is powered by a so-called “forked” version of Android, meaning it uses the open-sourced version of the operating system. The company’s smartphone will likely be run on the forked version of Android as well. The Google-approved devices come with pre-loaded Google apps, but Amazon’s forked version does not. After all, a mobile platform cluttered by pre-loaded Google apps would make branding difficult for Amazon, and branding is of utmost importance to Amazon’s free smartphone strategy. In order to offer a phone that costs approximately $200 to manufacturer for free, costs must be made up elsewhere. The most obvious solution is to use applications to steer users to purchase items on Amazon.com and buy digital media and other apps through its online store, which is why Google-branded apps would pose a problem. Amazon could also sell digital advertisements to be shown on its smartphones — a concept pioneered on its low-cost Kindle tablets.