After the debacle that was the Fire Phone, Amazon is back in the smartphone business with what appears to be a winning strategy. Instead of developing their own devices, at significant expense, Amazon is partnering with manufacturers to replicate their Kindle and Fire tablet ad-serving, subsidized-hardware approach in addition to pre-loading the companies commerce and consumption apps. So they end up with a similar sort of footprint in this space from a far smaller investment. And, on the flip side, their smartphone partners (initially Blu and Motorola) secure a new and potentially meaningful distribution channel. The only potential fly in the ointment is they’ve started with low- to mid-end devices and it’s unclear (to the casual observer) what the “Prime” demographic might prefer. Amazon’s intent is, likely, also to expand Prime’s reach by making these phones exclusive to the $99/yr program.
Makes you wonder what Amazon might due with their Fire TV platform… Go down the Roku path? Give Fire TV Stick to Prime Customers? Do it like the Dash button in allowing Prime members to buy the Stick but getting credited back when buying Amazon VOD? More importantly (for me) – when’s a NEW Fire TV stick gonna appear? That 1st gen one is like TiVo-slow.
I can see some takers for cheaper ad-supported phones (although I’m not sure how likely such folks would be to pay $99 a year for Prime, so yeah, maybe a demographic mis-match there, as you suggest). If you’re willing to go with a cheaper ad-laden phone, you’re probably not shopping for a pricey high-end flagship phone anyhow, hence Amazon only rolling out low-to-mid-range phones so far on this program.
I’m guessing we’ll see new Fire TV hardware of some sort this fall. The 2nd gen box came out last Oct. and the stick came out in Nov. 2014. Given the competition the Fire TV Stick is getting from the much more powerful new Roku Streaming Stick, I would think they’ll have to update it before the holidays.
Seems to me that the importance of the phone to Amazon at this point is to extend the success of Echo and the Alexa AI. As much as people like it, it’ll lose ground to Siri and Google if it’s not available everywhere. That said, I don’t expect them to have much success with their second kick at the can. Nobody needs an Amazon phone.
In thinking of my peers with Prime, most would not partake of the current lineup … for themselves. But they might for their parents or children.
“I can see some takers for cheaper ad-supported phones (although I’m not sure how likely such folks would be to pay $99 a year for Prime, so yeah, maybe a demographic mis-match there, as you suggest).”
None of Prime’s individual features are worth $99 a year. (With the exception of physical fulfillment, if you do a lot of that.)
It’s a package, where they hope you can find some combo of physical fulfillment and the whole panoply of other perks that makes it worthwhile for your personal use-case-scenario at the price. And once you’re inside the gates, you get more deeply immersed in their offerings…
I agree, Chucky, although I tend to see Prime as a very middle-class thing used by folks with iPhones and high-end Samsung phones, not so much people looking for lower -range phones at bargain prices.
“I agree, Chucky, although I tend to see Prime as a very middle-class thing used by folks with iPhones and high-end Samsung phones, not so much people looking for lower -range phones at bargain prices.”
Well, again, if you view Prime primarily as a physical fulfillment tool, it stretches into lower-middle-class too. (Tried, but couldn’t find a way to avoid the accidental pun.) Move enough of your shopping to Amazon from Wal-Mart, and the entry fee starts to make dollars and sense.
But yeah, 40th percentile of household income and up is likely where Prime’s sweet spot lies.
And once you’re inside the gates, not everyone wants the most expensive phone. (Though one would expect them to expand to higher-end models too, if the whole scheme works.) But the point of Prime is to have a range of goodies to appeal to most demographics.
I have already pre-ordered the $49.00 model. I’m not an iPhone or Galaxy Note enthusiast. So I feel like if Amazon can sell a good quality build phone with the full Google app store at a reasonable price, it will do well. I have a tween son at home so if I like it, I can add it to his yearly new school term shopping list. At the end of the day if it can do talk/text, weather updates and the occasional UFO picture, I’ll be happy.
They pivoted on phones because their original strategy failed. I don’t see them doing anything differently with fireTV– that is a very successful set of devices for Amazon.
I picked up the Amazon Moto G as a toy, even though I don’t need a phone, because it was only $125 shipped. My old nexus7 died, so I didn’t have an android toy. Was thinking about a $200 Shield K1 tablet, but the rumors of a refreshed Shield with the X1 stayed my hand. Can’t beat $125.
Moreover, I believe their strategy of attacking only very low-end and mid-range is correct. The $50 discount is very meaningful at those price ranges– Amazon can sell the phones without bleeding from the subsidy.
Anyway, fifty bucks off a $300+ Moto X Pure wouldn’t be enough to get me to buy the undoubtedly locked-down Amazon version. They would need a more substantial incentive, something like $50 off AND a year of Prime, to make that attractive. And blood would flow.
Move enough of your shopping to Amazon from Wal-Mart, and the entry fee starts to make dollars and sense.
I had Amazon Prime for a year and didn’t really find that to be true. If you’re willing to use Wal-Mart’s free Site to Store shipping (which I can route to an uncrowded Wal-Mart Neighborhood Market grocery near me), stuff tends to come out cheaper with Wal-Mart given that there’s no Prime-type entry fee in the first place. Of course, there’s lots of stuff you can get on Amazon that you can’t get on Wal-Mart. But then, you can find it somewhere, usually for very close or even cheaper than Amazon’s price, again with no Prime-type entry fee. I think Prime tends to make sense if you order a lot of stuff online and you’re not interested in shopping around but just want to rely on one store that you trust, plus you’re also getting some level of value out of other Prime services, like Prime Video. I’ll probably re-subscribe for a couple months around Christmas, both for shopping and to binge a few seasons of shows.
I go in and out of prime… I use it for movies, but only occasionally. I use it for fast/free shipping more often, but that is cyclical. I am about a month away from my membership expiration, and I likely won’t renew it until closer to Christmas. I am not one that would care to have a Amazon-subsidized (ad-supported or not) phone, as I live firmly within the Apple ecosystem, and I agree that the audience for that phone would seem to be relatively small. Chucky has a great point, though, that it is just one of many offerings (which includes a theoretical 1 and 2 hour shipping option in Raleigh, though the last I heard it wasn’t working as expected), and Amazon can keep rolling out “and then” features for Prime membership. It currently is the best deal around if you use it a lot, and I disagree that using Wal-Mart’s site to store is comparable or better, as you have to visit Wal-Mart to get what you ordered. Even a lightly populated Wal-Mart is worse than the simplicity of having an item at your door in a day at no cost (other than a yearly membership fee that can pay for itself in a number of ways to make you feel better about why you pay for it). I don’t use enough of the benefits of the membership regularly enough to stay on without a lapse, but it is hugely beneficial when I am in a heavy-use mode,
With the exception of one year, early on, I’ve been a Prime member since inception. Back in those days, the system let you add family not at the same address. I can’t tell you if we’re getting our money’s worth, but between my mom and my wife, I am not permitted to cancel. I do watch Prime Video now and then, but our primary benefit is the “free” two-day shipping. Not really using any of the other services – some due to half assed implementations like the Photo service.
For $125, I like the Moto G for a poolside phone. In years past, we brought cheapy tablets or other disposable phones to worry less about water damage or theft. Dynamics will likely be different this year with an infant. We’ll want best possible phone pictures and doubt there will be much/any “Kindle” reading going on. :)
I don’t know Apple’s plan in this space in the near term, but several companies are starting to offer waterproof (or at least ” resistant” phones) in the last couple of years, including the Galaxy S7. The rumor is that Apple is doing that with their 2nd generation watch, so they may also be kind enough to add some of those benefits to the iPhone at some point in the future.
As a follow-on to my previous post, I wonder if these might cannibalize sales of Fire tablets. And does it matter. Hm.
The one thing about these ad-supported phones from Amazon that surprises me a bit is that they appear to come with Google services, including the Play Store, pre-installed. So it’s easy enough for users to buy apps and content from Google rather than Amazon. Although I imagine that since the buyers will already have a Prime subscription, they will be more likely than the average Android phone user to buy through Amazon’s (also pre-installed) storefronts on the phone. I also wonder whether Amazon’s profit margins on these phones is as good as on their own Fire tablets. My guess is that Amazon would rather you buy a Fire tablet but sees the phones as mostly additive to their tablet line-up. Some cannibalization but a net gain overall.
The moto g4 actually IS water-resistant, in the same way as the iphone 6s/6s+. It isn’t actually rated IP, but it will survive a dunk in the toilet.
The 2015 moto G was rated IPx7, so it was a bit more robust, but what really kills phones is being dropped in the toilet and both the iphone6s and g4 will survive that.
“The one thing about these ad-supported phones from Amazon that surprises me a bit is that they appear to come with Google services, including the Play Store, pre-installed. So it’s easy enough for users to buy apps and content from Google rather than Amazon.”
They tried it on their own, and massively failed. But they don’t care about selling apps. More on this topic next.
“Although I imagine that since the buyers will already have a Prime subscription, they will be more likely than the average Android phone user to buy through Amazon’s (also pre-installed) storefronts on the phone.”
Yup. All they care about in the device is for you to use it to buy through from Amazon. Official Bezos Mantra™: “We make money when people use our devices.”
“I also wonder whether Amazon’s profit margins on these phones is as good as on their own Fire tablets.”
Maybe things have changed recently, but Amazon has always sold its devices at break-even or at a small loss. They’ve been repeatedly open about not having a profit margin on the BOM. (Their goal has also not to lose a lot of money on each device, which I think they temporarily broke in their previous failed Phone effort.)
So in short, I don’t they’re making any money selling tablet hardware, and thus none of this is a concern for them.
I would suggest Amazon selling Alexa powered phones and becoming an MVNO and offering something like a “Prime Phone” or “Prime Plus” service for let’s say $150-$200 a year that included unlimited talk/text/500 mb data per month to subscribers on a Fire smartphone in addition to current Prime features.(Sell addtional data separately).
The sales of the phone would then have the snowball effect of boosting the sale of Prime subscriptions as well as many of the other products Amazon sells.The amazon home page is one of the most prime selling spots in the world and I still believe an Amazon Phone could be a huge success if they did this.
I think there is a huge market waiting for the company that will offer unlimited talk/text and at least 500mb data for $10 a month or less AND get it in retail stores like walmart/best buy (or on the Amazon home page if Amazon does this.)If amazon did this,it could take a large chunk of marketshare from apple and samsung.On the other hand, it also could be done by a company that offered ultra low cost service for apple and samsung phones as well.
It seems obvious to me that the best way for an alternative OS to have any chance against android/iOS is to pair it with a low cost phone service.
As of now I only pay $10 a month combined for my home phone service and mobile phone service using a combination of magicjack and tracfone.
-Magicjack GO for home phone service for $3/month(includes magicApp)
-MagicApp for free unlimited mobile talk/text over WiFi on android/apple smartphones tablets.Works on 3G/4G too.
– limited tracfone cellular talk/text /data for $7/month for when WiFi is unavailable.I use the magicApp on an android tracfone.
But many people won’t use my method for whatever reason.Many people are simply unaware of this method,find it to confusing or maybe they are waiting for one phone service to offer them this kind of value in a simpler way on one device with one plan that can be bought in a retail store(or amazon site) and used immediately.Something with this kind of value that works out of the box without having to hopefully discover and download an app that most people don’t even know exists.
Amazon’s smart phones would have been a very big success, but they made the stupid decision partner with AT&T as the exclusive network the phones would function. I understand the AT&T probably dumped truck loads of cash on Jeff’s desk, and how could he resist an opportunity to recoup some of his expensive R&D and manufacturing costs. Whether it was Mr. Bezos intention to have an exclusive partner all along or AT&T perused this, I don’t know. But looking at the extremely successful Amazon tablets, it proves the masses just want an affordable device that work well and are willing to eschew “beautiful” Apple designs for a “Plain Jane” look, willing to accept the minor limitations of a forked Android device compared to the full Android experience, and don’t necessarily equate low price with either low quality nor greatly diminished experience, demonstrates people are looking for less expensive alternatives with good specs and performance. Add to that the people who have iOS or full Android tablets/phones as the primary device, but also GLADLY buy a Fire tablet to add to their quiver of tech, as well, and this all leads to the logical conclusion that Amazon smartphone would have been a massive success had it not been exclusive to the AT&T network. It is sad because the Fire Tablet business model has been a great success not just for Amazon but for the consumer. We’ll have to see how the pricing works out once it is available in the real world. Smart Phones and the wireless service they require to be truly robust (a smart phone only capable of WiFi access is just pointless for the moment) is just still way too expensive.
The money is the services not the hardware and the bottom is crowded, their is no money down there. Straight Talk, Consumer Celluar, Trac Fone, if anything the bottom is due for a shake out. Things are cheap as they will get, prices will go up, but Amazon is willing to give up profit in one area to make it in another. Something most companies won’t do.
Just like the internet, a mobile phone is a luxury, (and if you watch people a toy to many) unless your employer requires you to have one.