Feeds

Amazon to offer FREE smartphone?

Bezos may become Henry Ford 2.0

Mobile application security vulnerability report

Analysis Amazon may offer a free smartphone, as it contemplates another market to get into and sterilize. Though the strategy is a bold one, it is hardly new, and its basic idea goes back to Henry Ford.

Bezos & Co are planning to launch a free smartphone, ex-Wall Street Journal reporter Amir Efrati reported on Friday, and hope to offer it directly to consumers.

The Android-based phone's pricing [Or lack of same—Ed.] would fit with the ethos that has driven Amazon from a plucky startup in an austere garage into a corporate titan that has entered numerous markets where it has crushed the competition: price far enough below your competitors to bring in punters, own as much of the device and distribution chain as possible, sit back and wait while other companies whither away, and all the time make as little profit as possible to fund your relentless expansion.

As long as the shareholders keep buying your stock, the strategy is as potent as a nuclear bomb – and just as dangerous to market incumbents.

Just as the Kindle has redefined ebook publishing through a combination of technological advancement such as its thrifty "Silk" browser and "WhisperNet" global connectivity technology, so too may the Amazon smartphone use advanced technologies, such as a rumored "3D" display. If the product exists, then Amazon's skunkworks research center Lab126 will have a hand in it – and that means hardware innovation and clever software most likely working at a low level.

This, combined with the broad swathe of multimedia content available through Amazon and the backing of the hulking Amazon Web Services cloud, gives Amazon the traits that Google has with Android: fine-grained understanding of the software, total control over the backend infrastructure, and hardware expertise.

But because Bezos also owns a content distribution platform far, far larger than Google's "Play" store, the zero-dollar phone has a better prospect of earning back the $200-odd dollars its bill of materials is likely to add up to.

It's a strategy that goes all the way back to Henry Ford, who used a combination of good wages for employees and careful pricing of the first automobiles to make cars available to as many people as possible.

We may live in different economic times than did Ford, but Bezos's decision to offer the phone for free and then make money in after-sales makes him Ford's spiritual successor.

Like Ford, Bezos has control over a broad battle-tested manufacturing network. He also has a huge crowd of potential customers to draw on in the form of Amazon's millions of subscribers, as did Ford with his well-paid workers. But what Ford didn't own – the fuel in gas stations, and the distribution infrastructure for his cars – Bezos does in the form of the goods and streaming media services hosted on Amazon, and the physical logistics network he has built up through partnerships and more recently through the Amazon-operated grocery delivery service.

With a free phone, Bezos could quickly create a significant pool of users for that device, and then do what Amazon does best: lower prices to weaken competition while using any means necessary to minimize profits and pour all the cash into relentless tech advancement.

After all, if Ford had also owned Standard Oil, he may have given his cars away for free. ®

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Apple gets patent for WRIST-PUTER: iTime for a smartwatch
It does everything a smartwatch should do ... but Apple owns it
For Lenovo US, 8-inch Windows tablets are DEAD – long live 8-inch Windows tablets
Reports it's killing off smaller slabs are greatly exaggerated
Cheer up, Nokia fans. It can start making mobes again in 18 months
The real winner of the Nokia sale is *drumroll* ... Nokia
Microsoft unsheathes cheap Android-killer: Behold, the Lumia 530
Say it with us: I'm King of the Landfill-ill-ill-ill
Seventh-gen SPARC silicon will accelerate Oracle databases
Uncle Larry's mutually-optimised stack to become clearer in August
EU dons gloves, pokes Google's deals with Android mobe makers
El Reg cops a squint at investigatory letters
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.