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Monday, June 16, 2014

Amazon To Jump Into Smartphone Business

The giant online retailer Amazon is expanding its horizons and introducing a smartphone that could top all others on the market.

Amazon is set to introduce a smartphone with 3-D features this Wednesday at a media event in Seattle. Ina Fried, a senior editor at Re/Code, tells Here & Now’s Jeremy Hobson how Amazon may stand out from the crowded pack.

Guest

Transcript

JEREMY HOBSON, HOST:

Amazon has scheduled a big reveal this Wednesday in Seattle, and the expectation is that the company is going to introduce a new smartphone. Joining us from San Francisco, KQED in our HERE AND NOW contributing station there is Ina Fried who is a senior editor at Re/code. Ina, welcome.

INA FRIED: Thanks for having me.

HOBSON: And the expectation is that this is going to be a smartphone with 3D viewing? How would that work?

FRIED: So I don't think this is 3D in the traditional sense of the word where, you know, images just pop to life. I think what Amazon is trying to do is add some sensors in here and really make you feel like you're a part of the smartphone. So we understand it's going to have several front-facing cameras that are going to be used not just to take the ever popular selfy, but also to allow you to really dive into the user interface using, you know, gestures in your face and sort of the human interface, if you will.

HOBSON: And what is in it for Amazon? I imagine it's not just about selling phones but also about getting you to buy all of your products from Amazon as opposed to Apple, if you have an iPhone, or, you know, getting all of your apps from Amazon, buying all your books from Amazon - that sort of thing.

FRIED: And this is Amazon's strength is they can sell all kinds of things. So whereas the Samsungs and LGs and Sonys of the world, their only chance to make money is selling you the phone. Amazon's, you know, just starting when it sells you a phone. So they can afford to price it much less than competitors and hope to make money off or selling you physical or digital goods down the road.

HOBSON: Something that they did with the Kindle, which was sold for, I think, $199 at a time when the iPad was being sold for twice that.

FRIED: Right. The Kindle Fire table, which, you know, succeeded the e-readers, which are still sold, but really the Kindle Fire is their latest tablet. And this is basically going to follow the same playbook with a few tweaks and surprises.

HOBSON: Do you see the Amazon phone being something that's a lot cheaper than its competitors?

FRIED: I don't think it'll be tremendously cheaper. There are already competitors selling at close to cost. I think Amazon will certainly try to sell it for roughly what it costs them to make it because that's, again, not where they try to make their money.

HOBSON: Isn't Amazon coming into this a little bit late in the game, to come out with a smartphone in 2014?

FRIED: In a sense, yes. I mean, obviously, there have been, you know, the iPhones, you know, going on a decade - seven, eight years out there. At the same time, people buy a new phone, typically in the U.S., every couple of years. So there's always an opportunity. I think the real question is, do people want to buy their phone from Amazon, especially in a country where we tend to buy it from our carriers?

HOBSON: What do you mean by that?

FRIED: So most of us when we go to buy a new phone, firs of all, we tend to be fairly loyal to the AT&T or Verizon or Sprint or whoever we've been with. We may be going to their store or Best Buy. We find our we're eligible for an upgrade. We look around at what they offer and we pick one.

Amazon is more likely to sell this directly, which is a different way of buying cell phones. It is popular elsewhere in the world, but has been less so in the United States.

HOBSON: And I guess we'll have to see who they would partner up with, if anybody, with a phone company the way that Apple originally did with, I think it was AT&T.

FRIED: Exactly. And Amazon has in the past partnered with AT&T. They briefly used Spring for the first Kindle, and they've done some stuff with other carriers more recently. But this will be interesting to see, one, who they partner with and also whether they do any tweaking to the rate plan. Do they offer cheaper service? Do they bundle in - if you're watching a video from Amazon, do they bundle that in where you don't pay extra for the data that uses?

HOBSON: How is the company doing in general, Ina?

FRIED: Amazon is doing well in the sense that it continues to grow its revenue and dive into categories. The question has always been what can it make money from? What can be sustainably significantly profitable? And that's, you know, just one of the things that, you know, this is going to have to settle. Like, does smartphones actually make them money - certainly, a tougher proposition than can they make a smartphone, which clearly they can.

HOBSON: Ina Fried is senior editor at Re/code joining us today from San Francisco. And that announcement about Amazon's potential smartphone is expected on Wednesday. Ina, thanks so much.

FRIED: Thanks for having me. Transcript provided by NPR, Copyright NPR.


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