So, investment tea-leaf-reading site Seeking Alpha has a piece by Panabee Research on ways that Amazon could “attack” Android with its new device, presumably a smartphone, it will be announcing this week. Noting that Amazon has historically sold its hardware devices at close to their wholesale cost and made most of its money from content sales, Panabee believes Amazon should go with “a volume strategy and an attack on Android.”

Because Android is so fragmented, Amazon doesn’t require a large market share in order to “threaten Android and present a compelling alternative to developers.” The article goes on to talk about ways Amazon could reimagine its devices with innovative features like 3D, or web apps baked right into the OS.

I suppose that’s one way of looking at things, but what puzzles me is why Amazon should want to. Its devices use their own “fragment” of Android, after all, and it sells apps in its app store that work on plan vanilla Android devices. (It also gives away one app free per day. Today’s is a very pretty Orrerry application. Grab it if you’ve got Android devices!) Why would Amazon want to limit development for its platform only when it can sell apps for practically any Android device out there and skim its retailer’s cut from every sale?

Apple’s the one that’s traditionally about walled gardens. Amazon, with a few exceptions (like Prime Instant Video, grumble grumble), is about openness. It doesn’t care if you read your Kindle e-books on a Kindle fire, a Nexus, or even a Nook tablet. As Panabee notes, Amazon makes its money from content, so it really doesn’t make sense for it to try to outcompete other operating systems. It just has to keep people interested in its content ecosystem, and if they can do that with Amazon’s own devices, that’s just a bonus.

It seems to me Amazon’s device strategy ought to be more about picking up users who aren’t committed to other devices at all yet because none of the ones out there right now appeal to them. If Amazon can figure out a way to appeal to that kind of new device user, then it’s gotten more customers and expanded the overall market.


  1. I’ve never been clear why Amazon wants a smartphone. As big as the company is, this could prove a bridge too far. A reputation for failing is hard to shake. Not capturing a major market share with one product will cast doubt on its next big try.

    Where in the smartphone market will it fit? Apple owns the high end, Samsung dominates the middle, and even Microsoft can be said to own the unenviable slot for the smartphone that everyone knows they shouldn’t buy.

    Does Amazon want capture the low-end like it has done with the Kindle Fire? Maybe, but where is the content that’ll make up for the low device price? Amazon already sells content to almost every other smartphone and tablet. What’s the benefit of selling the same content for a device that has to be subsidized? It’d be like an oil company selling discounted cars in the odd belief that means they’ll sell more gas.

    Vanity could be the reason. Amazon may have pioneered mass-marketing epaper readers, but none of its Kindles, epaper or tablet, rise above the ho-hum in anything but price.

    The answer may lie there. As the pre-release ad hints, Amazon may want to take wow-factor prestige away from Apple and create something that impresses even if it doesn’t generate much new content sales.

    • Do I detect a whiff of sour grapes? 🙂 People have been skeptical about almost every new thing Amazon’s ever tried. And true, a lot of them haven’t panned out…but a surprising number have, including some of its biggest risks (such as the Kindle itself). And Amazon doesn’t need to set the world on fire; it just needs to cover its costs.

      We’ll just have to wait and see.

  2. So glad you wrote this. The original article muddled the central premise: that there is an opportunity in the smartphone market for Amazon. I’m revising the article to clarify this point, and trying to get the original deleted but Seeking Alpha unfortunately doesn’t offer that capability. Would love your thoughts on the new article. Thanks!

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