Citigroup Says Amazon Phone Coming 2012
Amazon just rolled out a full-fledged tablet. Next year, says Citigroup's research department, it could have its own phone. Here's the topline from analyst Mark Mahaney's newest note: — “Amazon smartphone may be coming next year …
Context & Ripple Effects
The call extends an arc that has been building all year: Jeff Bezos teased a tablet with a 'stay tuned' in May 2011, the Wall Street Journal reported an October target that summer, and the Kindle Fire shipped this month. Now Citigroup's Mark Mahaney argues the same playbook points at a phone in 2012 — a prediction, not a confirmed product, but one syndicated quickly by SplatF and The Atlantic Wire.
What makes the thesis credible is the Fire's economics: an IHS iSuppli teardown pegged build cost at roughly $202, essentially matching the selling price. Amazon is already selling hardware at cost to drive content and retail purchases, which is exactly the structure a phone would inherit.
First-order effects
- If Mahaney's call proves out, Amazon enters the smartphone market as a price disruptor rather than a spec competitor — the Fire's at-cost hardware model applied to a category where carriers subsidize devices and lock in two-year contracts.
Second-order effects
- Low-end Android handset makers would face a rival that does not need hardware margin, forcing them to compete against a device whose real business is selling media and goods through it.
Third-order effects
- A confirmed Amazon phone would cement the pattern of retailers and content companies treating hardware as a customer-acquisition channel, shifting value in mobile from the device sale to the account behind it.
The trend: Commerce-first companies are moving into consumer hardware priced at cost, converting device sales into locked-in retail and media relationships.