Why an Amazon Kindle Smartphone Will Be a Tough Sell

The Web is all abuzz today with rumors about an upcoming smartphone from Amazon.com. The rumors themselves aren't new; speculation on a possible Amazon smartphone started right around the time the company launched its Amazon App Store for Android in March 2011.

However, both Bloomberg and the Wall Street Journal fanned the flames during the past week with new reports.

The Amazon "Kindle" smartphone--it's unclear if such a handheld will be branded "Kindle", but it seems likely--will run Google's Android OS, and it will be manufactured by Foxconn, the Chinese company that makes Apple's iPhone, according to Bloomberg.

The Amazon smartphone's display is expected to be between four and five inches in size, according to the Journal, which is about average for current all-touch, mid- to high-end Android phones, though no resolution details were reported. The device is still in testing stages at Foxconn, which means it won't go into production until late 2012 or early 2013, the Journal says.

Amazon made headlines last September when it launched its Kindle Fire tablet to steal market share from Apple and its iPad and lock more customers into its digital content services. The Kindle Fire is now the most popular Android tablet, according to research from ComScore, which pegs the device as holding roughly 55 percent of the overall Android tablet market. However, Apple's iPad still holds roughly 68 percent of the total tablet market, and the Kindle Fire has just four percent, according to Q1 2012 statistics from IDC.

Numbers aside, Amazon proved it could compete in the tablet space, but the smartphone market is a much different game, with a more diverse cast of characters. As with the Kindle Fire, an Amazon Kindle smartphone would be meant to increase sales of Amazon.com's digital content, including books, instant streaming video, and movies and TV. By that measure it could be considered a success if Amazon can steal just a fragment of the overall smartphone space. But even that could prove to be a very difficult task for Amazon. Here are a couple reasons why.

1) Kindle Smartphone Will Run a "Crippled" Version of Android

No shortage of options exists when it comes to buying new smartphones today. If you decide to go with Android, it's probably due to the relative "openness" of the platform, as well as its vast selection of mobile applications.

If the Android software on the Kindle smartphone is anything like Android on the Kindle Fire, it will be "locked down" and tailored to Amazon's services, and it won't provide the best Android experience available--not even close.

Most Android smartphones and tablets, with the exception of the "Nexus" devices, are tailored to specific manufacturers' hardware and services, but Amazon took it a step further with the Kindle Fire by blocking the Google Play Store in an attempt to persuade users to purchase apps from its own Amazon Appstore for Android. (You can install Google Play on the Kindle Fire, but you need to "root" your device, which can be a bad idea from a security perspective.)

Amazon even included its own "Silk" browser instead of Google's Android browser. Amazon's implementation of Android is, in my opinion, one of the worst Android experiences.

I suspect the Kindle smartphone will offer more of the same. The Android OS is available on more than 680,000 distinct devices, from nearly 600 different manufacturers--check out a visual representation of this fragmentation here--and the only real positive differentiator for Amazon will be its digital content offerings.

Amazon books and music are already available to all Android users via the company's Kindle and Amazon MP3 apps, but Amazon Instant Video TV episodes and movies are not. Still, the availability of streaming video wouldn't be enough to convince me to embrace an Amazon smartphone, and I'm guessing most smartphone buyers will feel the same.

Google's Play Store, which is available to the bulk of Android users, is growing and becoming a more suitable digital content provider every day. So unless the price of the Kindle smartphone is drastically lower than comparable devices--or even free--Amazon will have a tough time convincing smartphone buyers to go Kindle.

2) That 2013 Launch Date Could Be Too Late

The most recent rumors suggest that Amazon's Kindle smartphone won't launch until early 2013 or later. That means, from both a hardware and software perspective, it will have to compete with next-generation iPhones and Android devices, Windows Phone handhelds, and BlackBerry devices running RIM's new BlackBerry 10 OS, which are also expected in early 2013.

Apple, Samsung, HTC, Motorola, RIM, Microsoft and others are far more established players in the smartphone game. And unless the Kindle smartphone offers some unique features or functionality, its main differentiator will be Amazon's digital content services. As stated above, that's not enough of an edge.

An early 2013 launch date would also mean that Amazon will miss the 2012 holiday season. That could be particularly bad for Amazon because many of the smartphones purchased during the holiday season as gifts are low-to-mid range devices, since many of these entry-level devices can be had for free or for reduced holiday prices.

If Amazon decides to offer its Kindle smartphone for a lower-than-average price, it will be targeting the exact kind of people who take advantages of holiday deals, so missing the holidays could be a huge missed opportunity.

Again, Amazon proved it can compete in the tablet space, so I wouldn't count it out just yet. But it will be facing an uphill battle in the smartphone market, and its digital-content ecosystem--and even a very low price point--might not be enough to set it apart from the pack.

Al Sacco covers Mobile and Wireless for CIO.com. Follow Al on Twitter @ASacco. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Al at asacco@cio.com

For comprehensive coverage of the Android ecosystem, visit Greenbot.com.

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