Over the weekend we had speculation that Amazon was going to release a free smartphone: that speculation has now been put to rest with the company pointing out that it's currently unknown whether there will be a smartphone or not but if there is it definitely won't be free.
The original reports surfaced on Friday:
From just the one report about Amazon, maybe and maybe not, intending to release a branded smartphone for free we’ve had a flowering of speculation about what it is that they might be able to do to make such a plan work. The basic idea is most certainly not strange: you can get a free smartphone off most airtime providers these days as long as you sign up for a contract. The question is, what does Amazon have to put in that contract in order to make the free part of the phone work for them?
Amazon spoke to the WSJ on Sunday to point out that the story isn't in fact true:
Amazon.com said on Sunday it had no plans to offer a phone of its own in 2013 and said any such future phone would be sold, not given away. The statement, from an Amazon spokesman, refutes a report from website JessicaLessin.com on Friday that the Seattle company has been exploring options to offer a smartphone free of cost. “We have no plans to offer a phone this year,” said the spokesman in an email on Sunday. “If we were to launch a phone in the future, it would not be free.” It is the first time Amazon has responded in detail to reports about developing a smartphone.
This is something of a pity as I'm pretty sure that the technology and prices are coming together to the point where a free phone could in fact be made to work. After all, the networks themselves are entirely happy to give you a (low end) smartphone if you sign up for a contract for a couple of years. So the general idea of subsidising the handset down to a price of zero in order to then get the revenue stream is obviously workable.
And I think that this can only continue. The chips and screens and batteries that make a smartphone work are getting cheaper by the day. And there's no great necessity to get an ever faster one with ever more memory: this isn't like PCs back in the days of the Windows monopoly where every new release demanded the latest and greatest hardware in order for it not to run like syrup.
Amazon has a number of revenue streams that it could tap into, its own advertising network for example, commissions on sales and it could even take the step of becoming an MVNO to capture the airtime revenues.
I don't know that this is possible of course: but I do think that it's potentially achievable. And it would be nice to see someone trying to run with this idea. Phones just are getting cheap enough that it could well be possible to give them away and yet still make a profit.