Amazon's Phone is a "Low-Risk Strategy" That Could Pay Off

By Roger Baettig | February 01 2013 11:09 AM

Amazon (NASDAQ: AMZN [FREE Stock Trend Analysis]) CEO Jeff Bezos practically confirmed the existence of a Kindle smartphone last fall during an interview with Charlie Rose. Ultimately he did not specifically say "yes" or "no" to the project -- but his coy attitude was more than enough to excite the tech community.

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Apple doesn't discuss product pre-releases, but several tech sites claim Apple has built smaller dock connectors for its new phone, dubbed the iPhone 5, by some. Three independent manufacturers have agreed the 19-pin port "is in the works," but one extremely interesting fact mentioned was that the size of the 19-pin port: Apparently, the new "mini dock connector" is very similar to the size of the Thunderbolt port made available on many current MacBook laptops. That got me thinking: What if that is a Thunderbolt port?

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"My take is they may as well [release a phone]," Jan Dawson, Ovum's Chief Telecoms Analyst, told Benzinga. "They've done the work already in getting their own version of Android, which they use for the Kindle Fire line. They've got the Amazon App Store [from] Android, which means they have an application platform they can use for smartphones as well."

Dawson also noted that the company has a large base of existing Kindle and Kindle Fire users that may be interested in buying a Kindle phone.

"And just making one device and selling it through one carrier as an experiment is a pretty low-risk strategy at this point when they've done a lot of the investment already," he said. "If it doesn't work out they can always say, 'That was an experiment, it didn't work out, we'll move on.' If it does work out, there's a lot of upside there -- getting people who are already loyal Amazon users to have yet another device they can consume content on."

Dawson's "one carrier" idea is particularly interesting because of the path Amazon has already take. The 8.9-inch 4G model can be purchased with an optional data package that is provided exclusively from one carrier -- AT&T (NYSE: T).

Very little is known about the unconfirmed Kindle phone, but rumors have suggested that it will be released in the spring or early summer months. This would separate the device from the next Kindle Fire update, which is not expected to arrive until late summer or early fall.

"I'd see [the phone] being a good strategy as an experiment, if nothing else," Dawson added. "Whether they actually will or not, we'll see. There are a lot of indications that they will."

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