Amazon also thinks, "Why the heck not?" says Brad Stone at Bloomberg BusinessWeek. Stone, who wrote a book on Amazon, says, "Fueled by his pride in Amazon’s inventiveness and his stubborn refusal to cede even an inch of the tech landscape to other companies" Bezos is determined to release successful hardware products.
Amazon’s new smartphone will make it easier than ever for people to buy Amazon products.
Sam Hall, an Amazon mobile executive, laid out one of the company’s driving goals to The New York Times a few years ago: “We’re trying to remove the barrier between ‘I want that’ and ‘I have it.’”
The phone will likely sell for cheap, because Amazon doesn’t expect to make much (if any) money off the hardware. Instead, it will make money when customers use their phones to buy more Amazon products, which it will encourage them to do.
He also said, "We do not like the razor and razor blade model, where you lose money up front and then somehow make it up on the backend. We also do not like the other model, where you make a lot of money on the device, because it doesn’t follow our approach."
The phone’s rumored 3-D capabilities could be one key to that, if they let customers view Amazon products in a whole new way. If, for example, you can easily scope out a new leather messenger bag from all angles on your phone simply by moving your head, you may be quicker to press that “buy” button. Amazon may also build and expand on the functionality of its Flow app, which lets iOS users add items to their Amazon shopping carts by simply pointing their camera at them. The idea is that it makes it easier for users to re-order household items like shampoo or toilet paper when they’re running low.
Amazon has already proven its sell-for-cost strategy with its Kindle e-reader hardware. Amazon makes slim margins on each Kindle sale, but owners spend 30% more on Amazon than non-Kindle owners, according to a recent survey by Mark Mahaney at RBC Capital Market. With mobile commerce growing 23% in the last quarter —nearly twice as fast as desktop online sales — a smartphone synced with Amazon’s various marketplaces could offer a bump in sales.
Source: Business Insider
