With an Amazon smartphone, the retailer seeks a tether to consumers

Jun 17 2014, 09:15 IST
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The phone is the last and most crucial link in this colossal enterprise. The phone is the last and most crucial link in this colossal enterprise.
SummaryHold the phone: Amazon wants to burrow even deeper into your life.

Hold the phone: Amazon wants to burrow even deeper into your life.

The retailer is expected to introduce a smartphone on Wednesday at an event in Seattle, a long-rumoured project that aims to close any remaining gap between the impulse to buy and the completed act.

Amazon has spent the last several years furiously investing billions of dollars on multiple fronts: constructing warehouses all over to deliver goods as fast as possible, building devices as varied as tablets and set-top boxes, and creating and licencing entertainment to stock those devices.

It all adds up to a wildly ambitious venture without precedent in modern merchandising. Wall Street has generally cheered as competitors — an ever growing group that now includes businesses like Walmart, eBay, Apple and Google — regard these activities with increasing unease. Customers, meanwhile, are propelling Amazon toward the rarefied ranks of companies with revenue of $100 billion.

The phone is the last and most crucial link in this colossal enterprise. It is a singular gamble for a company that, for all its technology components, is still primarily a merchant. Because even the smartest tech companies have trouble with phones.

A Google smartphone, the Nexus One, failed to catch on. Google next bought Motorola and then dumped it. BlackBerry, once the dominant smartphone maker, is struggling to survive. Microsoft’s Windows Phone has less than 3 per cent of the global market. A Facebook phone stumbled last year.

When it comes to smartphone profits, Apple and Samsung divide them up, leaving crumbs for every other manufacturer.

At least in the United States, phones are a mature market, with 120 million sold last year. Now Amazon is giving this brutal business a shot. On the one hand, analysts say, it has no choice. On the other, the rewards could be tremendous.

“Mobile is asserting not just its utility but its supremacy,” said James McQuivey, an analyst with Forrester Research.

“If you’re Amazon, you’re worried you’re going to be cut out of the next big interface. So you jump in and make yourself relevant, whether your customer is in the bathroom, the kitchen or the car. You go for broke.”

For Amazon, the risk of doing nothing is that it could be completely marginalised by one of its competitors.

McQuivey offered the example of coconut flour.

Search for the flour on Google, and Amazon comes up in two of the top responses, one of them an ad it paid for. In

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