Amazon Smartphone Inches Closer, Expected to Leverage Mobile Commerce with Payment Platform

Amazon is reportedly working on a smartphone that is expected to rival the iPhone and Android devices. The possibility of an Amazon smartphone coming out this year had been reported late last year by Citigroup analyst, Mark Mahaney. Mahaney had mentioned that Amazon was working with Foxconn to develop a “mid-end” phone that would not have the latest high-end chipsets found on most recent phones.

The projections seem to be coming true, as Amazon has been looking to acquire patents that seek to protect it from infringement allegations. In addition, Amazon acquired UpNext, a 3D mapping developer, for an undisclosed sum earlier this month. This acquisition has been seen as a move to incorporate a mapping application into the smartphone. The acquisition was indeed necessary, since Amazon does not have its own proprietary mapping app. The app does not offer the high-end functionality found on iOS devices, but it does a lot more than your standard 2D-mapping app is capable of. While a mapping application could prove useful to the Kindle Fire, it is likely to get more mileage out of a phone. 

It is likely that Amazon will want to compete on price by lowering its cost. Having said that, average phones need to sell at $243 on average to generate a 30 percent gross margin. Amazon will likely fix the price anywhere from $150-$170 and make up for lost money through media sales.  The new Amazon phone is supposed to use a Near Field Communications (NFC) chip that ties back to Amazon payments. By using the same operating system as the Kindle, it will also be possible to have Amazon’s daily deals service available on the smartphone.

Amazon has a huge store of information about customer buying habits, and with mobile commerce picking up, Amazon seems to be better placed to offer deals or discounts based on past customer buying habits and current location. This information can even be used to predict what you might be interested in. An Amazon smartphone would not only help businesses get higher conversion rates, but also allow Amazon to leverage its online commerce business into the real world through mobile phones with NFC chips built into them, kiosks and terminals.

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