As soon as Amazon unveiled the Kindle Fire rumours erupted that the ecommerce giant was working on a Kindle Phone with Citigroup’s rumour monger/analyst Mark Mahaney the latest to ignite the debate after a “supply chain check”.
It may be true that Amazon will release a whole range of devices, such as a more advanced tablet running NVidia‘s quad-core Kal-El chipset – a device supposedly nicknamed “Hollywood” -but these are all consumer devices. Amazon makes money from its stores/services – so selling the Kindle Fire at cost makes sense if users then buy all their music, films, books, and magazines through the company. But phones are different beasts entirely.
The Kindle Fire runs a very customised version of Android 2.3 (Gingerbread), and has deep integration with Amazon’s services. I don’t see Amazon wanting to share that integration with a mobile phone network – most of which have been trying to crowbar their own integrations onto devices for years. Apple manages to produce products without carrier interference, but such deals are rare – and only really exist due to AT&T’s belief in Steve Jobs at the start, and then their leading position since then.
Amazon is a fantastically successful business, but it makes and sells hardware in order to sell content to those consumers, whereas Apple makes its major profits through selling hardware (with huge mark-ups), and then selling the content is more of a bonus – this creates very different starting points when looking at phones. Apple just needs to sell the phone to make the production a success, but Amazon would need to sell the phone and then lock that consumer into buying content only from them over the lifespan of that phone to make it a success – a much more difficult task.
Could Amazon make a phone? Sure, and they could price it competitively at the budget-end of the market to get sales. But people want more from a smartphone than a consumer tablet like the Kindle Fire – it is much more than just shrinking the form factor and adding a phone chip and microphone. It would make more sense for Amazon to build exclusive deals with carriers or even Google to have the Kindle app and Amazon integration installed on all Android phones rather bthan build the device themselves.