I’ll believe it when I see it. Still, former Wall Street Journal tech journalists Amir Efrati and Jessica Lessin have a lot of people wondering about the possibility this afternoon with a report that the e-retail giant is “considering” just such an offering, citing “people familiar with Amazon’s effort”. They note that the talk involves a phone that consumers could order directly from Amazon without having to sign a multiyear contract with a service provider that would subsidize the device. How would Amazon recoup the $200 or so cost to make the smartphone? The article acknowledges that this is one of many “unanswered questions about the plan and what strings will be attached.” The writers say that Amazon could offer the device to people who pay $79 a year for Amazon Prime, which includes free shipping for some products and access to the company’s video streaming service. They also speculate that Amazon could sell ads and steer smartphone owners “to shop for goods through Amazon.com and to purchase digital media and apps through its app store”.
If the idea pans out, it could create havoc at Apple (which plans to introduce its latest iPhone next week), Samsung and Sony (which introduced their new smartphones this week), and Microsoft (which just agreed to pay $7.2B for Nokia’s device unit). But it’s an awfully big “if.” The story notes that the free strategy “isn’t set in stone”. Among other things, Amazon needs to find hardware manufacturers who “haven’t committed to only producing Android devices approved by Google”. While it’s hard to compete with anything that’s free, the leading smartphone makers are racing to develop low-priced models — which will be especially appealing to consumers in developing countries. Apple watchers say that it will offer a budget version of its iPhone next week, many of which will go to China Mobile, according to The Wall Street Journal.