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Amazon May Hand Out Free Kindle Smartphones

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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  • SirDrannik
    It's a good plan. The average consumer cares mostly about the price, and free, is better than cheap.
    Reply
  • ipwn3r456
    If it's completely free (no contract, no other purchases, etc.), I might just get one for backup uses.
    Reply
  • eklipz330
    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
    Reply
  • house70
    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 trolls on said websites.
    Reply
  • DRosencraft
    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.
    Reply
  • Azn Cracker
    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.
    Reply
  • John Bauer
    11503286 said:
    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?
    Reply
  • John Bauer
    "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.
    Reply
  • Old_Fogie_Late_Bloomer
    Meanwhile, over at Ars Technica, this rumor has already been refuted by Amazon...after the "news" was originally broken on Friday...
    Reply
  • m32
    Free phones? Google, if Amazon wants to do it then I know you can.
    Reply