Rumor: Amazon Is Making a Smartphone, May Give It Away for Free

The Citizen's Guide to the Future
Sept. 6 2013 5:07 PM

Rumor: Amazon Is Making a Smartphone, May Give It Away for Free

Jeff Bezos: the "Crazy Eddie" of the tech world?
Jeff Bezos: the "Crazy Eddie" of the tech world?

Photo by Mario Tama/Getty Images

Here's one way to steal Apple's thunder.

Will Oremus Will Oremus

Will Oremus is Slate's senior technology writer.

Days before Apple is scheduled to announce a new, cheaper iPhone, sources are telling former Wall Street Journal reporters Amir Efrati and Jessica Lessin that Amazon could become the first tech giant to offer a smartphone for free, without a service contract. The report is far from solid, quoting anonymous "people familiar with Amazon's effort" and asserting only that the company is "considering" introducing the device for free. The story gets shakier from there, implying that there may be other financial strings attached, and then acknowledging that the free strategy "isn't set in stone." From the piece:

There are many unanswered questions about the plan and what strings will be attached for customers. One of them is whether Amazon would require its smartphone owners to pay for services such as Amazon Prime, the company’s loyalty program. But the people familiar with the matter said that Amazon wants the device to be free whether or not people sign up for a new wireless plan at the same time. ...
The free strategy isn’t set in stone and depends on several factors, including Amazon’s ability to work out financial arrangements with hardware partners, said one of the people who is familiar with Amazon’s smartphone effort. This person and others expressed skepticism about Amazon’s ability to pull off a free device.
Advertisement

I second that skepticism. It's one thing to "consider" giving away smartphones and quite another to actually give away smartphones. But it's tantalizing to imagine, and if anyone company could do it, Amazon would be a leading candidate. The company's hardware strategy has been to use devices as loss leaders for Amazon's retail business. Actually, you could argue that Amazon's entire business is basically a loss leader for itself.

Recall, though, that there were also rumors at one point that Facebook might give away smartphones as a loss leader for its business of harvesting users' data. In fact, the "Facebook phone" launched with a price of $99. After it flopped, the price was cut to just 99 cents with a contract, but HTC found it could barely give the thing away.

Of course if Amazon handed out phones with no strings attached at all, they'd be gone in a jiffy. But the Facebook phone fiasco suggests that even the barest financial obligations may be enough to scare a lot of consumers away from a phone that they wouldn't be inclined to buy otherwise. So unless Amazon really is going to just start shipping scot-free phones until it runs out of them, the lesson is that the hardware itself is going to have to hold some appeal for customers in order to catch on.

Future Tense is a partnership of SlateNew America, and Arizona State University.

TODAY IN SLATE

Politics

Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

IOS 8 Comes Out Today. Do Not Put It on Your iPhone 4S.

Why Greenland’s “Dark Snow” Should Worry You

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Amazon Is Launching a Serious Run at Apple and Samsung

Television

Slim Pickings at the Network TV Bazaar

Three talented actresses in three terrible shows.

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

The Ungodly Horror of Having a Bug Crawl Into Your Ear and Scratch Away at Your Eardrum

We Could Fix Climate Change for Free. Now There’s Just One Thing Holding Us Back.

  News & Politics
Weigel
Sept. 17 2014 7:03 PM Once Again, a Climate Policy Hearing Descends Into Absurdity
  Business
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
  Life
Outward
Sept. 17 2014 6:53 PM LGBTQ Luminaries Honored With MacArthur “Genius” Fellowships
  Double X
The XX Factor
Sept. 17 2014 6:14 PM Today in Gender Gaps: Biking
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Brow Beat
Sept. 17 2014 8:25 PM A New Song and Music Video From Angel Olsen, Indie’s Next Big Thing
  Technology
Future Tense
Sept. 17 2014 9:00 PM Amazon Is Now a Gadget Company
  Health & Science
Jurisprudence
Sept. 17 2014 4:49 PM Schooling the Supreme Court on Rap Music Is it art or a true threat of violence?
  Sports
Sports Nut
Sept. 17 2014 3:51 PM NFL Jerk Watch: Roger Goodell How much should you loathe the pro football commissioner?