“Which technology giant will be the first to offer a free smartphone? Amazon.com Inc. is making a play,” Amir Efrati and Jessica E. Lessin report via JessicaLessin.com. “In a previously unreported move, the online retailer and Kindle maker is considering introducing its long-planned smartphone for free to consumers, according to people familiar with Amazon’s effort.”
“There are many unanswered questions about the plan and what strings will be attached for customers. One of them is whether Amazon would require its smartphone owners to pay for services such as Amazon Prime, the company’s loyalty program,” Efrati and Lessin report. “But the people familiar with the matter said that Amazon wants the device to be free whether or not people sign up for a new wireless plan at the same time. (Wireless carriers typically discount the price of devices if customers sign up for a one- or two-year wireless contract.)”
Efrati and Lessin report, “One person familiar with the effort said the company has talked to wireless carriers about offering its phones, though it is expected to offer them directly to consumers through its website. A launch date also is unclear… The free strategy isn’t set in stone and depends on several factors, including Amazon’s ability to work out financial arrangements with hardware partners, said one of the people who is familiar with Amazon’s smartphone effort. This person and others expressed skepticism about Amazon’s ability to pull off a free device. Still, Amazon’s pricing ambition is the clearest indication of its phone playbook: undercut rivals and grab meaningful market share.”
Read more in the full article here.
MacDailyNews Take: You get what you pay for.
If it’s for free, I’ll take one to use as a door stop. It’s fun helping make Amazon’s margins even thinner.
Desperate companies call for desperate measures. God knows they aren’t making it up paying more for eBooks than they take in. Wall Street of course will reward such anti-profit largesse.
Well I’ll take 1000….at no cost to me, but it will really piss off Amazon 😀
Sounds like an inflated price, considering.
When will people learn – there is no such thing as free. Everything gets paid for, and someone makes a lot of money.
Follow the $$$ and se just how much this “free” phone costs you, and just how much privacy, freedom, etc you give up!
Yes, it’s free and funded by sales or the Amazon Bazaar Marketplace. Profits from selling everything from snot remover to toe jam cleaner. Amazon doesn’t sell just books anymore. They sell EVERYTHING with huge profits to fund products to disrupt a market that they want to monopolize… nice plan all approved by the DOJ. Ha!
Amazon’s margins are razor thin… at best!
“Amazon’s pricing ambition is the clearest indication of its phone playbook: undercut rivals and grab meaningful market share.”
It’s called predatory pricing, and it’s illegal.
Predatory pricing practices may result in antitrust claims of monopolization or attempts to monopolize. Businesses with dominant or substantial market shares are more vulnerable to antitrust claims. However, because the antitrust laws are ultimately intended to benefit consumers, and discounting results in at least short-term net benefit to consumers, the U.S. Supreme Court has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole, in order to establish that there is a substantial probability of success of the attempt to monopolize.[3] If there is a likelihood that market entrants will prevent the predator from recouping its investment through supra competitive pricing, then there is no probability of success and the antitrust claim would fail. In addition, the Court established that for prices to be predatory, they must be below the seller’s cost.
The US Government never cared when they did it with e-books, so why would they care about Amazon’s smartphone?
Because the present government is bought and paid for.
If this phone is anything like their Kindle Fire then free is too much. I was asked by a relative to fix her Kindle Fire. There were really no tech issues besides it sucking. I told her to return the Kindle Fire and buy an iPad. She’s much happier after doing so.
Oh. My. Hairy. God.
Seriously, this is news? Amazon MIGHT offer a free phone with a qualifying cell contract? You can buy an iPhone 4 right now, today, on the AT&T web page, for $0.99. It’s not free, but it’s under a dollar.
Can Amazon undercutting Apple’s prices by less than a dollar really qualify as price dumping? Is this really interesting, or is it just a really really stupid post?
That was free WITHOUT a contract.
So…if carriers are charging fees to subsidize the cost of the phone, if the phone is free, shouldn’t your fee charged by the carrier be less? How will that fit in with all of their offered “plans?”
I didn’t know Amazon was a “technology giant.” Silly me, I thought Amazon was an online retailer.
Lazy, stupid journalist.
Amazon has to have some bazaar long term plan that assumes they will put every other consumer retailer out of business, then they will raise prices and finally, actually make money. There is absolutely no other explanation for what they are doing. Meanwhile people will continue buying from them, because their prices are low, and help this bazaar finally to come to fruition sooner. Oh and if the e-book thing is an indication, the federal government is backing their effort.
Besides boycotting Assmung and Google, I’ve actually stopped using Amazon unless absolutely necessary, even if that means giving Walmart a sale 🙁
My problem not using Amazon is you can boycott yourself right out of Internet convenience. I only take solace is that they don’t make much on the sort of things I buy.
I stopped buying anything from Amazon about three years ago. I don’t miss them. For a while I used to still read the revues. Now I don’t trust them. I either shop at local brick and mortar shops or dedicated web sites ( Adorama for camera related goods, etc.).
At least when I shop local some of that money goes back into my community (parks, roads, FD, PD, etc.).
Look up “predatory pricing” under “anti-trust law”.
And yes, the present, and probably former administrations know exactly what Amazon is doing.
If Amazon ‘thinks’ of something, their stock goes up. If they deliver something, their stock goes up. If they sell it for free, everyone assumes that they will make up for it with volume!
The clueless will learn all to quickly that it is not free and is not the best in class phone.
So that means everyone will want a free phone everytime the latest model comes out? How does that benefit amazon? At least you could solve for fragmentation relatively quickly.
Earning less in exchange for growth is what the market thinks is good .
Wait for it….. wait for it…
Here it comes….
Almost here….
“US Department of Justice opens investigation into alleged collusion between Apple and others to raise the price of smartphones”
Amazon NEEDS another loss leader. Otherwise investors will be able to see how low real earnings are, and the stock would collapse.
It will probably be free with a subscription to Amazon prime for a minimum of three years (two years of Amazon prime coverage would perhaps not be enough to cover the cost of making the phone unless new features are added and the price is increased). Better yet…imagine Amazon offering a subscription VOIP service like Vonage at $10 – $15/mo unlimited to compete with FaceTime Audio and decrease need to carrier minutes.
LOL… Ok u take one for free. That is going to cost them a fortune if its true.