Amazon was – again – reported to be working on a smartphone, this time apparently in partnership with troubled vendor HTC.
According to Financial Times, three devices have been in development, of which one is at an “advanced stage”. However, it was cautioned that the timeline for launch has changed before, and that there may not be a commercial release at all.
Amazon has been reportedly eyeing the smartphone market for some time, although none of the previous rumours have come to fruition.
While the company has done an impressive job of driving the tablet market with its Kindle Fire devices, along with the supporting content and apps ecosystem, it is likely to see challenges should it move into the smartphone space.
For example, it has been able to price Kindle Fire competitively with the aim of generating profit from content sales, but there is no guarantee that it will be able to pull off the same trick with smartphone users, where media consumption habits are different.
This means it may be difficult for the company to support the same kind of disruptive pricing model as with the Kindle Fire, which at the time it was introduced significantly undercut rival products.
In addition to which, there is still little evidence that an unlocked smartphone sold direct can be a mainstream consumer success – Google’s Nexus line is arguably an exception to the rule, but it took a long time for this range to gain traction, and even now the volumes involved are a blip when compared with those achieved by devices sold through traditional channels.
Partnering with operators would be one way around this, but would require a significant amount of work from the company, negotiating multiple deals in multiple countries – and negating many of the benefits it has as a pure online retailer.
And the smartphone market is already fiercely competitive, with a number of top-tier vendors having struggled to keep pace, which would make it difficult for a new entrant to compete. While Amazon certainly has a strong brand, and Kindle is also recognised, it may still find it difficult to lure buyers away from the raft of already available products.
But partnering with HTC does, at least, seem to make some sense. While the device maker has struggled in recent years, it has significant experience in delivering successful consumer smartphones, and certainly its latest devices – the One line – have been well-regarded.
It also has significant experience working with other vendors to bring products to market. While the company’s recent joint effort with Facebook was largely met with apathy, it built its business manufacturing devices which were sold by other vendors and operators, before moving to build its own brand.
And with its own volumes having dwindled in recent years, HTC would be able to meet the needs of its customer fairly easily, while also benefiting from the economies of scale this would deliver. It has been widely reported that HTC is suffering from supply chain issues, as its falling volumes (and therefore smaller orders) mean it has slipped down the priority list for partners.