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Amazon DENIES launch of iPhone-killing freebie smartphone

What you talkin' 'bout Willis 'people familiar with the matter'?

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Amazon won't be launching a freebie phone later this year, in fact it won't launch any phone this year and has no future plans to give hardware away, ever.

The story started on Friday as an exclusive from ex-WSJ journo Amir Efrati, and spread across the blogosphere like wildfire as it sounded feasible and came from "people familiar".

But now Amazon has formally denied the story and issued Efrati with a statement explicitly stating that it has no such plans... at least not this year, and at least not for a free phone.

The idea sounded convincing given the way that over-the-top companies such as Amazon and Google are increasingly taking on the role of the network operators. The argument goes that if they are taking the revenue, they might as well take on the device subsidy too.

It's no secret that the smartphone revolution is powered by the easy credit of handset subsidies. Even Apple couldn’t survive without them, despite trying to sell the iPhone for what it cost Steve Jobs was forced to take the operator coin to get the iPhone off the ground, and implement an MMS client in exchange.

If companies like Apple and Google are going to take revenue off the operators with OTT offerings like Facetime and iMessenge and GTalk, respectively, then shouldn't they be providing the subsidy we need for annual smartphone upgrades? Given Amazon's ability to take margin off everything, from apps to Apples, it made sense they'd be the first to take the plunge.

All of which made the story very believable, even it wasn't true. The fact is that OTT players are very happy letting network operators provide credit to those buying hardware.

But there are signs that operators are becoming bored of subsidising other businesses, and will start making punters pay retail prices, at which point perhaps Amazon and its ilk will see the advantages of loss-leading the hardware. For the moment, though, there's little reason for them to bother. ®

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