Rumored Amazon Smartphone Could Help Company Sell More, Collect Data

With a smartphone, Amazon could collect more data, offer better recommendations and sell more stuff—in addition to shows and games.

In a smartphone market in which experienced competitors with, by all accounts, excellent devices have had a terrible time chipping away market share from industry leaders Samsung and Apple, rumors of a new entrant might be news to shrug off.

Unless that entrant is Amazon.

The company that started as a bookseller has spread its tentacles in all directions—from groceries to set-top boxes, mobile applications and book publishing—and with success.

"If you think about the Kindle Fire, people said, 'Why are they doing this? Why are they even trying to compete with the Apple iPad?' But they've made some great strides and really sold a lot of Kindle Fires," Tom Caporaso, CEO of Clarus Marketing Group, told eWEEK.

Clarus helps retailers compete with Amazon, so "Amazon's always on our radar," said Caporaso. Clarus has been showing companies how to offer free shipping, since before Amazon offered that service. And, among a suite of other programs, it helps customers set up paid subscription loyalty programs, such as Amazon offers with Prime.

Caporaso spoke with eWEEK about the rumored Amazon phone, and suggested that its potential to succeed shouldn't be underestimated.

"At a high level, the phone is another opportunity to have another consumer touch point, or gateway, for shopping—they make a lot of their money via shopping," said Caporaso. "Like with the Kindle, it's about using the low cost of the hardware as an entry for premium services and shopping."

Caporaso said he wouldn't be surprised if Amazon were to take a loss on the cost of the hardware, and he believes Amazon can make a very high-end phone that competes alongside devices from Apple or Samsung.

The other piece of Amazon's motivation, he adds, is data.

"You know those, 'Here's 15 other things you could like.' We all wind up looking at those things," he said. "The more information Amazon has on users, the better their recommendations are and the more people buy."

Along with more data, "they could even tap into GPS, and do more around Amazon Local," Caporaso continued. "There's just a lot of opportunity on the data side."

As for potential buyers, "[The company] wants to go after the loyal Amazon customers, but also do some prospecting for people who might not have a high-end smartphone and want to get one but at the right price."

These customers may or may not be the same people who passed on the iPad in favor of the Kindle HD.

"It'll be interesting to see, in the next week or two, if they hint at the rumors," Caporaso added. Amazon will announce its quarterly earnings on April 24.

On April 15, BGR posted what it said were leaked photos of the Amazon phone, adding that it has a "custom 3D interface unlike anything we have seen before on a smartphone."

According to BGR's sources, the phone will feature a 4.7-inch display (same as the rumored Apple iPhone 6), and feature a pixel density of 720p, instead of the 1080p on the highest-end devices.

Last spring, Amazon purchased the British voice-recognition start-up True Knowledge, which gave rise to rumors that Amazon's smartphone could feature a strong rival to Apple's Siri. (However, between Fire TV and Amazon Dash—a voice-controlled wand that lets AmazonFresh customers add items to their grocery lists—Amazon is already putting that acquisition to good use.)

Further, at its Fire TV launch, Amazon shared news about the creation of Amazon Game Studios—which in addition to creating games for television could well be developing original games for an Amazon phone. The company is already developing original video content in addition to selling and renting movies and network shows.

Numerous reports anticipate a June arrival for the phone and that a second, lower-end version will follow later this year.

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