Dial Tone

20 11 2011

FastCompany magazine was certainly on top of things this month when it predicted the big showdown between Apple, Amazon, Google and Facebook. These four companies, three of which were developed in just the last 17 years, are poised to duke it out for not just share of our wallet, but also share of our minds. With annual sales revenues ranging from $4 billion (Facebook) to well over $100 billion (Apple), the companies are still rather disparate on paper, but their practical effect on society are nearly equally huge.

In their own ways, of course.

Now that Amazon has shipped its Kindle Fire, new rumors are starting to circulate that an Amazon Smartphone will be available in about a year. And I am not the least bit surprised.

Critics will be quick to point out that the smartphone market is already pretty busy, and completely dominated by Apple and Google. RIM’s Blackberry is gasping; Microsoft is hoping; and Palm is dead and buried. So WTH is Amazon thinking?

Good question, Sherlock. Amazon not only needs to build the iPhone/Android killer, but also get in bed with the big cell phone service providers. No small task. And what in the world would it take to get people to buy an Amazon phone?

Turns out it could be quite easy.

Amazon is banking on the new Kindle Fire being an iPad killer because it is only 40% the price. Its killer app (and hopefully saving grace) is that it is also a shopping machine, inexorably tethered to Amazon’s e-commerce site. One-tap shopping is what Amazon is hoping people will do.

Given the great gap between Apple (which reaps about $399 for every iPhone sold) and Google (which earns a paltry $10 per phone in comparison), Amazon has to find a way to squeeze into the middle ground. And there is a lot of middle ground left unprotected.

If Amazon can slide in with a smartphone that is close to Microsoft’s latest ($50) or even up to $100, and pack it full of access to their streaming music, cloud services, self-publishing and e-commerce, it will have put yet another shopping machine in people’s hands.

And, given that 50% of the US cell phone market is still up for grabs when it comes to smartphones, this rumored product could be the juggernaut of 2012. It probably won’t come close to rivaling Android or iPhone in coolness and apps, but it can more than make up for those factors in price and other services. Plus, if Amazon were to target the 50% without smartphones, I doubt that this group of people is really all that concerned about apps anyway.

Because they probably would have already purchased an iPhone or Android.

The phone is ringing. I think it’s my broker. How much you want to bet he’s telling me to pick up some Amazon stock?

Dr “A River Runs Through It” Gerlich

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