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Amazon May Hand Out Free Kindle Smartphones

By - Source: Jessica Lessin | B 18 comments

A free Kindle phone could hurt Apple, Samsung and Google.

Unnamed sources recently told former Wall Street Journal writer Jessica Lessin that Amazon may hand out its rumored Kindle smartphone to consumers for free. Sources said that the company is shooting for a completely free device, meaning there may not be any financial "contracts" like a two-year wireless contact or a required Amazon Prime subscription commitment.

Yet sources are also quick to be skeptical about Amazon's ability to pull off a free device. The deal would require Amazon to work out financial arrangements with hardware partners. Typically, wireless carriers commit to a large number of devices in return for a bulk discount. The costs of these phones are then subsidized so that customers pay a portion up front -- whether it's $1 or $300 -- and eat the rest of the cost in their wireless plans.

Without this type of setup, Amazon would essentially be paying for each device out of its pocket with no financial return save for media consumption. But what better way to topple the likes of Samsung, Google and Apple than by dishing out free Android-based Kindle phones? Amazon, which makes the bulk of its revenue from ecommerce, would likely see a huge increase in sales of digital media, its Android Appstore, the Kindle store and all through Amazon's shopping portal.

Amazon will reportedly offer its Kindle phone directly to consumers, but sources claim that the company has also approached wireless carriers about offering the device. How would this work when the phone is free? Easy: bundle it with other possible 4G LTE Amazon products. Keep in mind that Amazon makes very little profit off the hardware sales of its current tablets; providing a free phone likely won't push the company into bankruptcy. The real money, it seems, is in the software and ecommerce sales.

"We want to make money when people use our devices, not when they buy our devices," Amazon CEO Jeff Bezos said during the Kindle launch last year.

Back in May, reports surfaced stating that Amazon was actually working on two phones, one of which will be a high-end device possibly using HP's "hologram" tech. The glasses-free 3D smartphone will feature retina-tracking software that will make images seem to float above the smartphone screen like a three-dimensional hologram, complete at every viewing angle. Users will reportedly be able to navigate through content by merely using their eyes -- so the sources claim.

Who wants to bet the lower-end model will be the free phone? All hardware is being developed inside Amazon's Lab126 facility in Cupertino, Calif., sources claim, known as Project A, B, C and D, and collectively as the Alphabet Projects (two phones, music player, set-top box). This is also the same facility where the company was recently testing its own wireless network. The spectrum used in Amazon's testing is supposedly controlled by satellite communications company Globalstar Inc.

Talk of an Amazon Kindle smartphone has been around for nearly two years. Foxconn supposedly had an order for 5 million units back in December 2012, and the device was slated for a mid-2013 release with a pricetag between $100 and $200. But industry sources said in February that the phone was delayed due to design issues.

There's a good chance we'll see these two phones during Amazon's next wave of hardware releases to be revealed within the next several months. Of course, we've said that for years now, so anything is possible at this point.

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Display 18 Comments.
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  • 0 Hide
    SirDrannik , September 8, 2013 12:15 PM
    It's a good plan. The average consumer cares mostly about the price, and free, is better than cheap.
  • 7 Hide
    ipwn3r456 , September 8, 2013 12:42 PM
    If it's completely free (no contract, no other purchases, etc.), I might just get one for backup uses.
  • 1 Hide
    eklipz330 , September 8, 2013 1:25 PM
    this would work because the average consumer is a complete idiot when it comes to handling finances, so a cheaper up front cost ALWAYS boosts sales.

    that being said, if it's a reasonable plan, i don't mind locking down on a contract giving the phone is a very capable one and the monthly bill doesn't go over $50
  • 1 Hide
    house70 , September 8, 2013 1:49 PM
    The author is correct when he says these are Android-BASED phones. Like pretty much all the Android-based phones out there (with the exception of Google Editions and the Nexus devices) are like that, most of them are also certified by Google (meaning access to Google Apps and Play), whereas a few don't meet the requirements and are limited in terms of the apps availability. That being said, I expect these phones to have full access to Amazon Appstore, which contains pretty much all the apps from GPlay (except for GApps, of course, but these can be easily replaced with equivalent apps from Playstore).
    Since Android is a linux based open sourced OS, it is available to any manufacturer, who in turn can modify it to it's liking. Some out there are pretty succesfull at that (HTC, Samsung, Huawei, Sony etc) while a few obscure ones choose to heavily modify it.
    This correct distinction is seldom encountered on so-called tech sites (this one is usually no exception), but even when outlined correctly, it is still glanced over by readers (they stop reading at Android and ignore the BASED part) and in turn feeds some ubiquitous [ignorant] trolls on said websites.
  • -1 Hide
    DRosencraft , September 8, 2013 3:07 PM
    One, I highly doubt Amazon, or anyone, can swing a completely free phone. Those seemingly "free" phones require a contract because in the fine print the cost of the phone is a part of the contract, meaning you terminate the contract you owe a prorated fee to pay off the phone. A completely free phone would likely trigger suspicion by the SEC, FTC, and/or the Justice Department that Amazon is trying to unfairly game the market. A very old strategy for achieving a monopoly is to severely undercut the price of the competition, despite taking huge losses, so that your competition loses business, has to get out the market, and then you're the only one left in the market to charge as you please. That's how the first monopolies started, so regulators are gonna pay real close attention if Amazon tries to do this.
  • -1 Hide
    Azn Cracker , September 8, 2013 3:59 PM
    This is a terrible idea for Amazon. Many people would just hoard it to use it as a backup or resell it.

    They have to tie it with something else. Maybe get 1 free with Amazon prime or when you buy a $200 gift card (or larger amount). A more traditional approach would be to make it a free contract phone.
  • 3 Hide
    John Bauer , September 8, 2013 6:19 PM
    Quote:
    This is a terrible idea for Amazon. Many people would just hoard it to use it as a backup or resell it.

    They have to tie it with something else. Maybe get 1 free with Amazon prime or when you buy a $200 gift card (or larger amount). A more traditional approach would be to make it a free contract phone.


    Resell it for what? It's free. Who's gonna buy something that's free?
  • -1 Hide
    John Bauer , September 8, 2013 6:20 PM
    "We want to make money when people use our devices, not when they buy our devices," Amazon CEO Jeff Bezos said during the Kindle launch last year.


    For some reason, I feel slightly worried over this statement.
  • 2 Hide
    Old_Fogie_Late_Bloomer , September 8, 2013 6:53 PM
    Meanwhile, over at Ars Technica, this rumor has already been refuted by Amazon...after the "news" was originally broken on Friday...
  • -1 Hide
    m32 , September 8, 2013 7:46 PM
    Free phones? Google, if Amazon wants to do it then I know you can.
  • 1 Hide
    nhat11 , September 9, 2013 5:16 AM
    Even if they sell it for $50, I'm sure people will jump on it as long as the quality is decent.
  • 0 Hide
    teh_chem , September 9, 2013 6:21 AM
    Amazon is still in its infancy when it comes to full-service devices, IMHO. I bought a KFHD 7" and used it for a few months. It was plagued with constant slow-downs, cease of responsiveness, app crashes (even their browser crashed too frequently). Not to mention I suspect that the graphics were horribly underpowered given the screen resolution.

    I would not tolerate such things on my phone, so hopefully they have a strong development and testing regime to put potential phone handsets through, more rigorous than their tablets. I really wanted to give the KFHD a shot, but the performance issues coupled with the loss of capabilities vs. basic android, I got rid of it. I use Amazon services a lot, but I still would not use their tablets (or phones). E-readers is a separate thing that I have no problem with (but don't have one myself).
  • 0 Hide
    bustapr , September 9, 2013 6:35 AM
    I'm pretty sure if this is true, it'd be Prime-only. Just handing them out free to everyone would be plain stupid. Still very curious of how this phone would work out.
  • 0 Hide
    GreaseMonkey_62 , September 9, 2013 7:18 AM
    Not sure I would use a Kindle phone even if it was free. I've been less than impressed every time I use the Fire. Amazon's interface compared to stock Android is frankly annoying.
  • 0 Hide
    dark_lord69 , September 9, 2013 7:57 AM
    Well Sony, Microsoft and Nintendo (typically) take a loss on selling their consoles so that they can make profits when games sell.

    Example: Sony and Microsoft took a loss when they sold a new console... but for each game that was sold they got a percentage or a fixed amount. (Even when the game was made by another company.) That amount was WAAAY higher than the amount they lost.

    I believe that is Amazon's goal here. Get their devices into everyone's hands and people will start buying content. While that may be true I don't think I would pay for much content, certainly not enough to make up for the amount they would loose out on so I'm gonna have to say I will believe it when I see it on this one.
  • 0 Hide
    John Bauer , September 9, 2013 9:39 AM
    Quote:
    Not sure I would use a Kindle phone even if it was free. I've been less than impressed every time I use the Fire. Amazon's interface compared to stock Android is frankly annoying.


    My sister has a Kindle, I HATE the UI. I won't use it or buy one because of it.
  • 0 Hide
    stevejnb , September 9, 2013 11:36 AM
    This isn't such a bad thing for some people I suspect. On the other hand, it's hardly new, nor is the phone truly "free" if you actually intend to use it with a phone plan, I suspect. The cost of the phone is undoubtedly built into the plan offered, which is nothing new.

    Simple fact though, phone plans work well for some people. Dropping $500+ for an unlocked device and then paying for a less expensive plan doesn't work for some people as well as paying next to nothing for the phone and then paying more per month for a two or three year locked in contract.
  • 0 Hide
    Andres Arcesio Torres Cano , September 25, 2013 8:26 AM
    The product range offers and Amazon have made their website, a portal to get quality items at very attractive prices, this coupled with its tablet, which is a very good device, thanks to the efforts of Jeff Bezos (http://www.officegraphicdesign.com/web-design-miami ).