Amazon Shouldn't Enter the Smartphone Market: 10 Reasons Why

By Don Reisinger  |  Posted 2012-07-12

Amazon Shouldn't Enter the Smartphone Market: 10 Reasons Why

There€™s a lot of speculation, along with several published reports, that Amazon is planning to enter the smartphone market. The online retail company will reportedly try to jump into the fray as early as this year to complement its current mobile offering, the Kindle Fire tablet. For its part, Amazon hasn€™t said what it might do with its future efforts in the mobile space and hasn€™t even confirmed that it€™ll break into the smartphone market. But many analysts and industry observers believe it€™s only a matter of time.

For Amazon€™s sake, however, it shouldn€™t jump into the smartphone market. It might seem like a good place to be when one examines Apple€™s success with its iPhone, but not every company is Apple. And as Amazon has learned in the tablet space, trying to match Apple€™s products can be extremely difficult. At this point, it would be better for Amazon to stick with tablets, retail and cloud services, and leave smartphones to everyone else.

Here€™s a look at 10 different reasons Amazon should stay out of the smartphone market.

1. Price matters€”but not in the way you think

In the tablet market, Amazon was able to do well with a cheap device because a slate is a luxury product. A smartphone, however, has become a necessity nowadays. And with necessities comes a greater likelihood for customers to want to buy the best product out there. What€™s more, that best product€”in many consumers€™ minds, the iPhone€”is quite cheap at $200 with a two-year contract. Simply put, in the smartphone space, undercutting other products on price doesn€™t really matter.

2. This isn€™t tablets

Amazon  certainly  understands  tablets, and what it takes to be successful in that market. But the smartphone space is far more crowded and is governed by different rules. Amazon would need to play nice with carriers, attempt to have them promote its products as much as possible, and much, much more. Competing in smartphones is much different and far more difficult than in tablets.

3. Amazon isn€™t so high on design

Following that, it€™s important to point out that when offering a cheaper device in the tablet space, consumers are willing to forgo high-quality design. Considering the smartphone space is much different, design will prove to be extremely important. There€™s just one problem: Amazon has yet to show it truly understands high-quality design.

4. 4G LTE is a must

Since Amazon would ostensibly try to follow the same strategy in the smartphone space as it did in tablets, the company will have to leave some key features out. One of those could be 4G Long-Term Evolution (LTE). What a mistake. Looking ahead, 4G LTE service will be a necessity for smartphones. Any device, like the Kindle Phone, that would lack such a feature would be in for serious trouble.

Amazon Needs to Be Clear About What Drives Its Strengths


5. How will Android be handled?

One of the nice things about the Kindle Fire is that users wouldn€™t even know it€™s running Android. But whether Amazon would be able to pull the same trick in a smartphone is unknown. After all, Google is heavily promoting Android 4.1 (Jelly Bean), and consumers might expect some of its elements to be made apparent. Amazon won€™t do that, and that could hurt the company.

6. The timing is all wrong

According to some reports, it€™s possible that Amazon could be launching its smartphone toward the end of this year. If that happens, the company would be in for trouble. Apple will likely launch the iPhone 5 at some point around October. The last thing Amazon would want is to compete head-on with that device. Unfortunately, the company reportedly missed that memo.

7. Where€™s the long-term strategy?

By continuing to deliver cheap devices, Amazon doesn€™t appear ready to establish a full, long-term strategy. Instead, the company is focusing all its efforts on bundling outdated components into products that it can sell at a discount. Such a strategy is decidedly short term. And in the smartphone market, with companies mapping out their strategies over several years, short term is not a good thing.


8. Services can€™t come first

Part of Amazon€™s desire to sell its products for cheap revolves around its services. The company reasons that the more people it can get to sign up for its services, the better. In the tablet space, that might work. But in the smartphone market, Amazon needs to remember that the only way consumers will buy its device and then keep it for two years is if they like the handset first. Amazon has its plans backward. And that€™s a mistake.

9. What is Amazon all about?

Before Amazon can finally jump into the smartphone market, the company needs to determine what it is and what drives its strategies. Is Amazon a retail company that provides hardware? Is it a hardware company with online services? Amazon doesn€™t appear to know. And until it can figure that out, it might want to stay away from the smartphone space.

10. Too much hardware isn€™t a good thing

Amazon should be aware that getting into too many hardware businesses is not always a good thing. After all, hardware is costly, and the research and development that€™s needed to get it off the ground is something that can€™t be overlooked. What€™s worse, after launching a single device, the company might get caught up in a road map that will see it spend significant cash on a host of future launches. Hardware companies like Apple and RIM are good candidates for that. But retail companies like Amazon have too many moving parts to be offering all kinds of mobile products.

Follow Don Reisinger on Twitter by clicking here

Rocket Fuel