Amazon’s Forthcoming Smartphone Needs Attractive Price Point

by Matt Klassen on April 14, 2014

Rumours about Amazon’s impending entry in the smartphone market have been floating around for several years now, but even if such a phone comes with all the top end features there’s really only one way the ecommerce giant is going to find success in the cutthroat mobile sector, and that’s with price.

As CNET writers Roger Cheng and Donna Tam explain, “If the Seattle-based online retailing giant wants to make a mark in the smartphone world, as it is reportedly ready to do this fall, it should double-down on what it’s done so well in the past: offering a product that undercuts competitors.”

Simply put, while mind-bending 3D phones may seem like the wave of the future for the mobile industry the only way for Amazon to truly compete with established incumbents Apple and Samsung is to deliver high end affordability, if for no other reason than consumers will likely avoid a high-priced device branded with the Amazon name.

How would you feel if Wal-Mart began selling an ultra high end fashion line, something along the lines of Gucci or Versace? I would guess that you would immediately question the quality of such a clothing line, wondering how such high quality products would have found their way into such a budget oriented big box retailer like Wal-Mart.

It’s the same reason that consumers will be sceptical about any sort of high end smartphone from Amazon, they just “won’t see an Amazon-branded smartphone as a high-end competitor,” explains Kantar Worldpanel analyst Carolina Milanesi. Offering an attractive price point for any sort of Amazon smartphone will be the only way it will make any sort of splash in today’s mobile market.

“That has to be the way,” Milanesi said. “If you don’t go cheap, you have to rely on the carriers.”

Ultra-competitive mobile environment aside, working with carriers is one of the many difficult hurdles company’s like Amazon face when trying to establish a competitive presence in the smartphone market. InNorth Americacarriers all but run the mobile market, meaning they call the shots when it comes to both price and popularity. If Amazon delivers a high end phone yet can’t make a connection with consumers, carriers will toss it into the trash bin without a second thought.

If Amazon attempts to avoid carriers, however, it will face a mobile market where consumers really have no idea how much an unsubsidized phone costs. Given that carriers are able to offer top end smartphones for only a few hundred dollars on a two year plan, consumers often don’t think that those phones are sold far below their actual cost. If Amazon is going to overcome this, its going to have to offer consumer true value.

All that to say, if Amazon is hoping to make any sort of mark in the mobile market it simply won’t be able to do it with quirky high-end features like 3D technology or even with Apple levels of hype, it’ll have to do it in the one area the ecommerce giant really excels at, undercutting current market prices.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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