Recently, a rumor started circulating about Amazon preparing to launch a free smartphone, one that would be offered to various buyers for free with some kind of Amazon Prime subscription model, allowing the company to gain revenue and loyal customers.
An anonymous Amazon executive has replied back to the rumor, saying it is untrue and Amazon has no plans to build a smartphone this year, nevermind launch one with a free payment model.
Amazon has been a pioneer when it comes to trimming down the cost of tablets, with the original Kindle Fire the first real Android tablet to look away from the iPad and try to establish new ground the seven-inch market, for a cheaper price.
The idea of a free phone does not seem that insane when it is Amazon developing it and we are surprised to see this rumor has no bite, although the Amazon responder may just be covering the tracks – this could still be a thing that is going to happen.
We expect Amazon would lodge in something, it may not be an Amazon Prime membership, even though this would be the obvious candidate. If Amazon were to sign every buyer up for a two year Prime membership, not only would it be golden in long term userbase, but it would bring about $150 for each buyer, enough to almost cover the cost of the smartphone.
This could be more functional with a tablet, in our opinion. With a tablet, there is no carriers to get in the way (unless they go down the 4G route) and tablets are normally cheaper to make, we believe Amazon still makes $30 profit on each Kindle Fire sale.
Amazon is definitely looking into the mobile business, the company has made an extensive push with the Kindle e-readers, taking up most of the market share. The Kindle Fire is still one of the best selling tablets on the market, now they could have the best selling smartphone, if it is something unique.