In Australia, we’re no strangers to the idea of a free smartphone, since almost all of our two-year phone contracts include a fully-subsidised smartphone. The story in the US though is quite different, with customers having to fork out about $200 (depending on the phone) in addition to signing up to a two-year contract.
According to Jessica Lessin, Amazon are to be the first manufacturer to give away their smartphone to consumers for free. Although, much like our subsidised handsets, it’s unlikely that the phone will be completely free; it’s likely that Amazon will require an ongoing subscription to its Amazon Prime service at the least. Amazon are no stranger to selling devices at a loss and making money on content sales, as this is their business model for the Kindle tablets and e-readers, but the Kindles aren’t given away for free and there’s a big difference between making up a few dollars, and making up the entire cost of the device.
Apparently, Amazon have been in talks with mobile carriers to work out a deal where Amazon’s phone would be available on-contract, but they are reportedly keen to have the phone available at no charge whether the purchaser signs up to a two-year contract or not. A lot of the reason people sign up to lengthy contracts is to score themselves a free (or cheap) handset, and if you take the contract requirement away, there may be a reduced incentive for customers to tie themselves up, and this is not something that carriers would want.
Amazon have been rumoured to be building a phone for several years now, and it seems like a pretty logical step for them to take, considering how well Amazon’s Kindle Fire Android tablets have sold and the popularity of Google’s low-cost Nexus 4. Even if Amazon don’t end up giving the phone away for free, as long as they can produce a compelling device at a reasonable price off-contract, it’s likely to be a success.
