The Many Problems with an Amazon Smartphone

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The rumor of an Amazon smartphone is picking up steam, with Bloomberg citing two unnamed sources who say the device is in development.

Amazon is reportedly working with manufacturer Foxconn on the device, and is looking to acquire some patents to avoid getting pelted by lawsuits. The idea sounds plausible, though Bloomberg doesn’t say when the device will launch. It’s probably not happening anytime soon.

In any case, I’m not yet convinced that a Kindle phone would be a vital competitor in the smartphone market. While Amazon’s Kindle Fire tablet made perfect sense, a good smartphone requires a different set of apps and services, and it’s not obvious why Amazon would be any good at providing them.

The Kindle Fire was a no-brainer. Amazon already had thriving stores for digital books, videos and music, and had also opened its own Android app store. Amazon’s tablet also served a clear market need: At $200, it was significantly cheaper than the iPad, making it a great holiday gift for people who consume lots of content.

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On a smartphone, the user’s priorities are different. It’s all about getting things done efficiently, and Amazon doesn’t have much experience making software for that purpose–certainly not enough to match the highly advanced smartphones that are already available.

To compete with other phones, Amazon needs a turn-by-turn navigation service and built-in apps for calendars, alarms and reminders. It needs a way to quickly switch between apps, and a top-notch camera, with user-friendly features such as face detection, auto-focus, HDR imaging and burst shooting. On top of it all, Amazon could use a virtual assistant–or at the very least, rudimentary voice commands–to compete with Apple’s Siri and Google Now.

All those features are now table stakes in the smartphone game, and none of them are available for the Kindle Fire. Although the Fire is based on Android, Google doesn’t license its own apps, which on Android phones are crucial. On the tablet, Amazon was playing to its existing strengths with easy access to digital media, but on a phone, the company will have to start from scratch on other, more important aspects of the device.

Even if Amazon can provide all those services, it’s still unclear what purpose a Kindle phone would serve in the market. The Kindle Fire’s biggest hook was its $200 price, which at the time was unthinkable for a mainstream tablet from a reputable brand. But thanks to subsidies from wireless carriers, pricing isn’t an obstacle if you want a decent smartphone. On AT&T, you can get an iPhone 3GS for a penny, and on Verizon, you can get an LG Lucid for $50. (Amazon Wireless, by the way, sells some great phones for just a penny with a two-year contract, including the Nokia Lumia 900.)

It’s possible that Amazon could do something revolutionary and offer cheap, off-contract smartphones, while using its own content sales to help subsidize the price. That’s the same strategy Amazon uses to make money on the Kindle Fire, but with phones, the situation is different. Amazon would still have to sell wireless service, and would therefore need to cooperate with the very companies it’s trying to disrupt. Anyway, it’s pointless to speculate too much, since we just don’t know what’s going to happen.

Obligatory bet-hedging: I don’t want to rule out the possibility of a great smartphone from Amazon. As my colleague Harry McCracken pointed out last November, Amazon has a knack for simple and elegant designs, and it has the advantage of knowing a lot of people’s credit card details already.

But the smartphone market has been fiercely competitive over the last few years, to the point that a great phone is more than just an app store, a media player and dialer. If Amazon wants to build a phone, it’s got a lot of work to do.

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