Amazon Reinventing e-Commerce, Retail, & The Supply Chain on Smartphones

6 ways Amazon is prepared for the smartphone market

1. Amazon is built on a philosophy of low-margin market capture. Where competitors try to increase margins, Amazon is content to live on a few points — for years if need be — until it starves out all competition. In   the mobile world, manufacturers are used to marking up phones by several hundred dollars over their costs, then burying the prices in long-term monthly contracts that let consumers pretend they really aren’t spending $600 and up for a phone and committing to $2,000 or more in carrier fees. Yet, when forced to face their phones’ actual costs, consumers balk at prices over a few hundred dollars. A low-margin competitor could be a huge threat to other phone manufacturers.
2. Amazon has an entire stack of technologies that complement its device business: cloud services, a customized version of the Android operating system, an apps marketplace, an e-commerce platform with hundreds of millions of registered users, and a library of content — books, music, videos — that’s rivaled by no other company. That stack has already propelled the Kindle Fire to a solid #2 position in Android tablets. Imagine what it could do for a phone.
3. Experience first with e-book readers and then with its Kindle Fire tablet have given it a wealth of relevant consumer electronics experience, from dealing with contract manufacturers to distribution to support.
4. Its wealth of knowledge about retail means that it has deep insight into what kinds of phones sell, and to whom. It already sells nearly every phone available on the market, including Samsung’s and Apple’s, on its web site. That means it has a tremendous amount of data about the features people want, the carriers they prefer, how often they want to upgrade, and maybe even how likely they are to switch carriers.
5. A phone presents tremendous opportunities for advertising and cross-selling other products. If Amazon can make this, through apps or hardware, into a phone that you might actually use for shopping online, that’s a major win, obviously. But even if you don’t use it for shopping, it will still enable Amazon to collect location data and other information that will help it target your Amazon account elsewhere (when you’re shopping at your desk, for example).
6. Amazon is in this for the long-term. The company has a history of eschewing short-terms wins in favor of long-term gains. It likes to remind shareholders, year after year, that it favors long-term thinking over short-term profit maximization. It has the patience and the focus to stick with a new product category for years, iterating it and improving it, until it is excellent.

Source: VentureBeat