Amazon’s smartphone is having a tough time, and it is not hard to see why. It was launched into an overcrowded market without offering either the dramatic new pricing of the first Kindle Fire, nor the large screen which makes the tablets so suited to Amazon’s primary goal of selling content, especially video. But the real mistake was to debut a perfectly attractive smartphone in just one country and with one operator – when Amazon’s real opportunity is to take its low cost hardware and compulsive content to emerging markets where Apple is not in pole position.
Amazon slashed the price of its Fire smartphone last week, indicating that its exclusive with AT&T had not delivered the main goals of such deals – a window of premium price and hefty promotions by the carrier. It was always an odd choice for Amazon, whose device strategy usually relies on accepting ultra-low margins on the hardware, in order to create as large a user base as possible to drive content and other sales, the real source of revenues. And overall, one of Amazon’s weaknesses has been its slowness in bringing its products and services out of the US. It needs to address that and start to bring its attractive combination of low cost but well-designed devices, and massive base of content, to markets which are hungry for such offerings, rather than to an AT&T customer base which is inevitably obsessed by the Apple products.
For now, however, Amazon is treading cautiously in its international expansion and still, bizarrely, following in Apple’s early iPhone footsteps. Reportedly, it will soon sign an exclusive deal with Telefonica O2 in the UK – also the iPhone’s first non-US carrier – to sell the Fire. This would be a blow to Vodafone, which has the exclusive for cellular Kindle and Kindle Fire products in the UK.
Amazon will start selling the Fire phones in the UK, and also in Germany, with Deutsche Telekom, on September 30, the reports say. “We should make money when customers use the product, not only when they buy it,” because it makes it easy for users to find products online and buy them. “That’s served us well in other businesses,” he told the Financial Times, echoing sentiments often expressed by Amazon CEO Jeff Bezos.