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Chronicles

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Amazon Said To Plan Smartphone To Vie With Apple

Amazon.com Inc. (AMZN) is developing a smartphone that would vie with Apple Inc. (AAPL)'s iPhone and handheld devices that run Google Inc. (GOOG)'s Android operating system, two people with knowledge of the matter said.

Bloomberg

Context & Ripple Effects

This rumor has a paper trail: Citigroup analysts called a 2012 Amazon phone as far back as November 2011, and Bloomberg now cites two people with knowledge of the matter saying the device would take on Apple's iPhone and Android handsets. Nothing is confirmed — both claims are sourced, not announced — but the pickup was unusually broad, with AllThingsD, TechCrunch, GigaOM, BGR, PC Magazine, Business Insider, Mobile Marketing Watch and The Register all running the story on or about July 5, 2012.

The timing matters because the smartphone field Amazon would be entering is legally contested: Apple and Samsung are in ongoing courtroom patent disputes involving Android devices, and Apple has spent years fending off hardware challengers, from Sony's gadget push against Apple in 2010 onward. A retailer-turned-phone-maker would be a new category of entrant in that fight.

First-order effects

  • If the reported phone ships, Amazon becomes a direct hardware competitor to Apple and to every Android licensee overnight, competing for the same buyers its own content and retail business depends on reaching.
  • The report alone forces positioning statements from Apple, Google and major handset vendors, since an unconfirmed entrant backed by Amazon's distribution still reshapes partner and carrier conversations.

Second-order effects

  • Any Amazon handset running or forked from Android would inherit the platform's patent battlefield — the same Apple–Samsung litigation already testing Android devices — raising the legal cost of entry for a first-time phone maker.
  • Android ecosystem players would face a rival that can treat the phone as a channel rather than a profit center, pressuring hardware pricing and app-developer attention at the low and mid tiers.

Third-order effects

  • The pattern here is consumer-facing platforms verticalizing into owned hardware to tether customers directly — Sony tried it against Apple in 2010, and Amazon's version would mark retail and media companies, not traditional OEMs, as the next wave of phone entrants.
  • If retailers can credibly ship phones, the industry's structure shifts toward vertically integrated ecosystems where the storefront, the content and the device are one company — a consolidation pressure on standalone handset vendors.

The trend: Consumer internet and retail platforms are moving into first-party hardware to own the customer relationship, turning content and commerce companies into direct smartphone competitors.

Related: Citigroup Says Amazon Phone Coming 2012 · Sony Gadgets Take Aim at Apple · Amazon · AAPL · Android

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