Will Amazon Take on iPhone successfully? Seems Unlikely

As we all know by now that Amazon will be launching its own smartphone, most probably this year itself. Things became clearer on Wednesday when sources told Wall Street Journal that Amazon is actually working on a smartphone with one Asian component supplier. However, it would be hard to take on Apple’s iPhone for it as we believe. Here’s why.

Reading books:

Amazon is undoubtedly the top dog when it comes to digital media books. As far as the virtual storefront is concerned, Amazon is very well known for its Kindle store as far and its other print publications that bring the screen to life. However, even if the company opts for a 5-inch device, Amazon’s biggest selling point will be lost as people don’t really prefer a leafy read with the disadvantage of the entire page not fitting on the screen in a Smartphone.

Conflict of Interest:

Another problem as far as promotion is concerned is that the company devotes its home page to promote its house brands. It is likely that other names go unnoticed and there is a possibility for the same to happen with Amazon Wireless if Amazon is selling its own branded device.

Two-Year Commitment:

Kindle Fire tablets and Kindle e-readers which cost $199 and $79 respectively are a runaway hit as they are considered a purchase with no strings attached. But when it comes to smartphones, the case is a bit different. A consumer would like to believe that their smartphone would be around for a minimum two years. Moreover, though Amazon is a cool brand for retailers, would one like to show-off an Amazon branded phone?

No Pricing Advantage:

The Kindle Fire was able to turn heads as it was selling for less than Apple’s iPad. Cost is an important factor when selling is concerned. With wireless carriers still roughly making $2000 over a two-year contract with their subsidized device offers, there is no price point low when it comes to the free Google Android phones. In other words, Amazon does not have a pricing advantage since subsidized smartphones are already so cheap.

Exclusive perk may backfire:

The access to Amazon’s growing catalog of videos available at no additional cost to Prime shoppers is Kindle Fire’s strongest selling point. However, Amazon has been reluctant to offer video access to third-party portable devices, enabling users to use Amazon’s digital video by going online on a Kindle Fire or through television or set up box solutions. This surely is keeping the Amazon phone from achieving its true potential as far as digital initiative is concerned.

So although the company has done well in the tablet market with the Kindle Fire and has given the iPad a tough competition, it has not defeated it by any means. Apple iPad still rules the roost in the tab segment. We believe, the same story will play out in the smartphone segment as well. Amazon smartphone may or may not become popular, but iPhone (as well as phones like the Samsung Galaxy S3) will still be the dominant player in the market by far.