Analyst: Amazon should ‘hang up’ on phone

“In a note to clients on Friday, Colin Sebastian of Robert W. Baird said the ‘risks and costs outweigh the potential benefits’ of an Amazon phone,” Dan Gallagher reports for MarketWatch.

“Sebastian writes that while a tablet makes sense for Amazon, the same is not true for a phone,” Gallagher reports. “‘Since tablets skew more heavily toward media consumption than smartphones, they are a natural fit for Amazon’s commerce and media platform,’ he wrote. ‘In contrast, smartphones require specialized native apps (e.g., Maps, Voice Search, E-mail) that would be costly for Amazon to replicate.'”

Gallagher reports, “In addition, Amazon would face other costs related to R&D and carriers that ‘would be significant,’ he wrote. And while Sebastian currently rates Amazon’s shares as an outperform, he noted that he would view a smartphone launch by the company ‘negatively.'”

Read more in the full article here.

Related articles:
Apple’s revolutionary iPad widens lead as tablet sales surge – June 15, 2012
Apple’s massive domination of tablet market unabated as Amazon’s tiny screen Kindle Fire demand tumbles – June 5, 2012
Apple’s iPad remains dominant in Q112 while Amazon’s tiny screen Kindle Fire fizzles – June 4, 2012
Amazon’s tiny screen Kindle Fire shipments have dropped off a cliff – May 9, 2012
Amazon’s Kindle Fire shipments fizzle to anemic 4% market share – May 4, 2012

13 Comments

  1. At the same time, only Amazon has had remote success with an Android tablet. They have a support system already in-place, and an Android App Store.

    Amazon “forked’ Android for marketing purposes; people with Kindle Fires may not even know they’re running Android. I believe the only time it’s mentioned is Amazon’s App Store for Android.

    1. What are you saying? That Amazon’s success with the Kindle Fire will translate to success with the smartphone? Amazon is selling the Kindle at a loss and is making up that loss with subscriptions to Amazon Prime and selling books, magazines, movies and consumables for a tablet device. A smartphone is hardly going to be a major gateway to media consumption. So you’re going to pile losses on top of losses by selling the device. What’s the strategic advantage in that?

          1. I for one appreciate watching movies were I am right now. Although a larger screen is pleasant because you can sit back, if you want to see video when you want to see it wherever you happen to be. I don’t see anything wrong with the 3.5″ screen.

            Although it is best for short news items, I have watched whole TV shows and movies. I’d say the ideal longest use is the 30 minute situation comedy. Android users with HDMI ports claim they haul HDMI cable to hotels and plug their phones in to watch movies without PPV. I’m too lazy to walk that distance. I bring my AppleTV.

      1. I don’t believe Amazon has had much success with the Fire; there was like a Christmas rush and nothing since. That’s why I said, “remote success.” They just have more content infrastructure already in-place for a phone than most phone manufacturers do. Samsung, for instance, couldn’t offer anything near Amazon Prime, unless they partnered with Amazon.

    2. Amazon’s Kindle Fire “success” (which is very debatable) is due to Amazon willing to take a loss on each Fire sold in the hopes of making it up on the back end with sales of media content. A tablet does make sense for Amazon simply because Amazon’s main business is books/media sales, and books are moving quickly toward e-readers of some kind.

      A phone does not translate down as well. People will not buy an Amazon phone so they can read their books on it like they do with a Kindle. While that may happen occasionally (like it does with an iPhone), it will not be a reason why people buy a phone. Even a 4 or 5 inch screen is too small for regular reading — it’s just not comfy.

      Amazon would be much, much better served in enhancing its Kindle App for the iPad, iPhone and Android devices to such a degree that people would not want their device to be without it. Then Amazon wouldn’t even need its Kindle Fire model. After all, selling a $10 book to an iPhone user or a Kindle Fire user is the same sale to Amazon, the difference being that a Kindle Fire user needs a whole bunch of $10 books to cover Amazon’s loss on the Kindle Fire.

    1. The only FOS I see is you making up anything you can grab and throw, and to complete this little charade you have to throw out without any thought to whom made the original report, Let’s just reflect on the facts in front of us.

      The report was written by Dan Gallagher of MarketWatch, you really don’t understand the stupidity of” killing the messenger” do you.

      Let’s just rethink whom shall receive a club membership in that nonexistent FOS memberships category “tbone”.

      How you can win a membership that doesn’t exist is anyone’s guess, but “tbone” you would be the most likely recipient of that made up award for failure to understand that this is a News Site and not a playground, if you don’t like how it’s done, Please just use the proverbial door, and if it hits you in the ass on the way, So much the better.

  2. Not that anyone here would probably know but Amazon’s “technical support” for their Kindle’s freak’n sucks. And they think they can support a phone?!

    Good luck repairing your image Amazon when that it’s all over.

  3. Go ahead with your plans for a phone, Amazon. I don’t care because I already have a nice one.

    If you lose a boatload of money, not to worry, you’ll more than make up for the losses when you introduce Same Day Delivery for public consumption.

    In fact, your SDD process will wreak havoc in the retail sector, causing hundreds of retail stores to close up shop in the first year alone.

  4. Does Amazon want to compete or not? Google is milking the efforts of open source… Amazon should have been doing the same. Since they haven’t, they are seriously behind. Price can only get you so far. Come on… You’re an executive for a huge corporation with huge potential. Have some fun. You can do some stuff that can change lives. Roll with it and don’t look back. We’ll remember you…

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