How Amazon Can Disrupt Smartphones and Take Apple & Google to School | Hacker News Reader

How Amazon Can Disrupt Smartphones and Take Apple & Google to School

xconomy.com

23 pointsrobertbud120 comments

tldr; Amazon will give away a free phone because.... Wait. The author never says how this will work, why it will work, et cetera.

"I’m not sure if even Amazon can afford to play the free card...". So he's introducing an idea the author himself is 100% unsure of, with only a vague throw-away reference to anything remotely resembling an idea of how to make a profit off of this device.... For what reason? Because "it's a classic Bezos play". Okay. Whatever. Sorry for being flippant but almost every single "point" brought up makes zero sense. I think this article is just mental masturbation about the concept of a "free" phone.

Holy lack of reading comprehension, batman!

Chris says how it'll work in big bold letters: So what is Amazon's secret weapon in the smartphone battle? I'm betting it will be Jeff Bezos' favorite play: miniscule margins + massive patience.

Summary of how he says it could work: by taking the device and carrier selection out of the equation, Apple is cut off at the knees (for everybody who doesn't care about their phone). It gobbles up anything non-Amazon Android related, because those people are just getting free or cheap phones anyway.

Price conscious consumers are already drawn to android. Even if a free amazon phone was a decent android device it's unlikely that apple would care. And if it runs android isn't that still good for Google?

tl;dr - If amazon releases a phone it'll be android, low cost and good enough.

If Amazon uses the open source part of Android without actually joining whatever program Google has for manufacturers, then it's not clear how it would be good for Google.

(Such a scenario would probably also prevent Amazon from advertising it as an "Android phone".)

At this point it'd be too early to know if "Amazon" phone would have less cachet than "Android" phone, to most phone users. Since kindle has a pretty good brand they could call it the Kindle phone. Altho that would take with it some unwarranted/disconnected association. (long battery life/monochrome)

It's not about the device, it's about the service. Amazon could grab 30 million customers instantly with this plan: If you take these ideas to their logical conclusion, it's not hard to imagine Amazon pulling the biggest move of all: giving away a pretty good smartphone, along with unlimited voice + data, completely free.

Since the author didn't feel compelled to even sketch the economics of how Amazon could do this, we have to assume he has no idea if/how this would even work. Given that, why not also assert that Apple and Google and Microsoft could give away smartphones free with unlimited voice + data?

In a world where unlimited voice + data + low-cost phones can profitably be given away free, why would Amazon be the only company able to do so?

It was fairly plainly stated in the article:

So what is Amazon's secret weapon in the smartphone battle? I'm betting it will be Jeff Bezos' favorite play: miniscule margins + massive patience.

Apple makes most of their money from the consumer at the time of device purchase; their media and app businesses are low-margin service lines that feed and sustain their high-margin device sales.

They way they see it, if they hold on to that customer relationship long enough, they'll always make up the lost margin in customer lifetime value.

That's not economics, that's magic. For comparison, note how the author indicates specifically Apple's economic strategy:

make money on device sales + encourage more device sales by making less money on media and apps

Note that all of the numbers in the Apple strategy are positive.

There's nothing comparable for his Amazon suggestion. "Miniscule margins + massive patience" works when price > 0, for all existing Amazon product & service lines. Applying that formula using negative margins doesn't work.

It's one thing to say Amazon can make money on volume by selling TVs for razor-thin margins. It's something entirely different to suggest they can make money giving away $200 smartphones + $350/yr voice & data plans free in perpetuity. That's the part the author conveniently skips over.

Oh, I see where you're coming from. You're right if we limit the ecosystem to just phones, phones, phones.

But, Amazon is kinda everything in the frigging world. The amazon phone would (obviously) tie to your amazon account. You could instabuy anything. They would make buying things from Amazon a first class feature of the device. Having the device (much like having Amazon prime) would mean you most likely spend more through Amazon.

I admit it's a magic fairy dust line of thought, but it's still quite compelling.

Suru, I need more toothpaste by Friday.

Same kind as last time, sir?

Yes, Suru.

By your command.

My point was mostly that it won't effect apple as much as the article (headline) seemed to think. I'll still be buying the best equipment, not the cheapest.

Remember how Kindle Fire was going to totally disrupt Google and Apple as well?!

And at least with the Kindle Fire it made sense because it could be focused on the book reading aspect of Kindle and provide a better experience than stock Android + stock Kindle.apk.

Now Google has a decent e-book offering, a solid, similarly sized tablet and there really isn't as large of an "Amazon media" leverage advantage with a phone offering (specifically because of the form factor, that is).

My wife (not tech savvy) is in the market for a cheap tablet. I compared the Fire vs. the Nexus 7 with her tonight. She's only remotely thinking about the Fire because we have Amazon Instant w/ Prime. I'm trying to persuade her to go w/ the Nexus 7 so that it'll at least last for a while.

I think the hardware and services have flattened out enough that the only thing that matters anymore is the OS. And Google is winning that race against Amazon.

What an awful, buzzwordy article.

"Google tried this scorched-earth policy with Android, but in doing so lost control of the ecosystem—as the Amazon fork demonstrated so forcefully." - What does this even mean? Yes, open source means that even your competitors can use it. But there's quite a software difference between Amazon's version and Jelly Bean while the cost of the Fire vs. the Nexus 7 is $0. I don't think Google's too concerned about Amazon's "forceful" fork.

I don't see Google having problems matching Amazon on its price. The difference is that if updated properly, Google's Android will always give a better experience. If you aren't tied to Amazon Instant, why would you NOT go w/ the Nexus 7 over the Fire?

Same thing for the smartphone IMO.

Sites with bars over the content break my ability to read them well by paging down. On this site if I page down the very top line is the previous page's half-rendered bottom-most line. :(

They don't even need to play the free card, if they can come up with some kind of bundling deal. 50% off a decent smartphone with $30/month unlimited web & text with 1000 free minutes could be a dynamite deal for most folks. (Even if it's throttled after a gigabyte or so.)

You don't have to be free for the strategy outlined in the post, you just have to be too good to pass up. (Much like: A decent tablet for only $200.)

Could this be a paid leak?

'Disrupt' now means 'force adverts and consumerism instead of create value' in case you didn't know.

The author has a grim view of the future and wants to run toward it... is this normal?

Assuming what the author says actually ends up being Amazon's strategy, I think bringing in a dirt-cheap smartphone option and thereby accelerating the movement of another class of consumers (many of whom are probably still using feature phones) onto the mobile web is pretty disruptive, if only because it accelerates the adoption of the mobile web. The means -- forced adverts/consumerism -- isn't where the value is, the end -- more mobile web users -- is.

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