Online retail giant Amazon is considering offering its much-anticipated smartphone for free, it has been reported.The retailer is understood to be aiming to ‘undercut rivals’ and ‘grab a meaningful market share’ by tempting consumers using iPhones and Galaxy phones – which normally cost about $200 (£127) – to switch to their free version.
However, it is thought the company, which is already behind the hugely popular Kindle e-reader, may require its smartphone users to sign up to services such as its loyalty programme, Amazon Prime.
Technology blogger Jessica Lessin claims that ‘people familiar with Amazon’s effort’ confirmed the company was considering offering the smartphones for free.
But it is expected to come with some strings attached.
‘One of them is whether Amazon would require its smartphone owners to pay for services such as Amazon Prime, the company’s loyalty program,’ Lessin writes in her blog.
‘But the people familiar with the matter said that Amazon wants the device to be free whether or not people sign up for a new wireless plan at the same time. (Wireless carriers typically discount the price of devices if customers sign up for a one or two-year wireless contract.)’
One of the sources says Amazon – which is yet to throw its hat into the smartphone game but is rumored to be interested in doing so – has been in communication with wireless service providers about offering the phone on other carriers.
The phone, however, would be offered directly to consumers through a website.
Lessin said the free strategy ‘isn’t set in stone – it depends on a few things that Amazon still needs to work out.
For example, the company will need to figure out the financial arrangements with hardware suppliers who are actually manufacturing the phones – something one of Lessin’s sources isn’t entirely sure is feasible.
Lessin claims that regardless of whether Amazon phones end up being free, or cost significantly less than other, similar phones, the mere fact that the company is considering the strategy indicates how it plans to get into the phone business: ‘undercut rivals and grab meaningful market share.’
If it works, other smartphone companies could potentially be forced to follow suit and offer their products for much lower – if not free – prices.
Lessin considers this ‘Apple’s Nightmare.’
Source:The New York Times
