Hold the phone: Amazon wants to burrow even deeper into your life.
The
retailer is expected to introduce a smartphone on Wednesday at an event
in Seattle, a long-rumored project that aims to close any remaining gap
between the impulse to buy and the completed act.
Amazon
has spent the last several years furiously investing billions of
dollars on multiple fronts: constructing warehouses all over the country
to deliver goods as fast as possible, building devices as varied as
tablets and set-top boxes, and creating and licensing entertainment to
stock those devices.
It
all adds up to a wildly ambitious venture without precedent in modern
merchandising. Wall Street has generally cheered as competitors — an
ever growing group that now includes businesses like Walmart, eBay,
Apple and Google — regard these activities with increasing unease.
Customers, meanwhile, are propelling Amazon toward the rarefied ranks of
companies with revenue of $100 billion.
The
phone is the last and most crucial link in this colossal enterprise. It
is a singular gamble for a company that, for all its technology
components, is still primarily a merchant. Because even the smartest
tech companies have trouble with phones.
A
Google smartphone, the Nexus One, failed to catch on. Google next
bought Motorola and then dumped it. BlackBerry, once the dominant
smartphone maker, is struggling to survive. Microsoft’s Windows Phone
has less than 3 percent of the global market. A Facebook phone stumbled
last year.
When
it comes to smartphone profits, Apple and Samsung divide them up,
leaving crumbs for every other manufacturer. At least in the United
States, phones are a mature market, with 120 million sold last year.
Now
Amazon is giving this brutal business a shot. On the one hand, analysts
say, it has no choice. On the other, the rewards could be tremendous.
“Mobile
is asserting not just its utility but its supremacy,” said James
McQuivey, an analyst with Forrester Research. “If you’re Amazon, you’re
worried you’re going to be cut out of the next big interface. So you
jump in and make yourself relevant, whether your customer is in the
bathroom, the kitchen or the car. You go for broke.”
For
Amazon, the risk of doing nothing is that it could be completely
marginalized by one of its competitors. Mr. McQuivey offered the example
of coconut flour.
Search
for the flour on Google, and Amazon comes up in two of the top
responses, one of them an ad it paid for. In the future as designed by
Google, however, the search engine will remember what you’re looking for
when you’re out in the world and sell ads against that. So the next
time you pass Trader Joe’s, your Android phone sends a note: There is
coconut flour just 50 feet away.
If that sort of transaction starts happening too often, the coconut flour is going to go stale in Amazon’s warehouses.
In
building a phone, Amazon has advantages other phone makers do not. It
can sell to its 250 million customers without a middleman. It can bundle
features with the Amazon Prime membership club, as it just did last
week with a new streaming music service.
Most
of all, Amazon has the blessing of Wall Street to lose money as long as
it is gaining market share — although recently the enthusiasm has
dimmed a bit. The stock is about 20 percent off its peak.
An
early demonstration of what Amazon wants to do with shopping can be
seen in the Dash, a wand that the company quietly introduced this year.
Customers who belong to Amazon’s grocery service can use the Dash, which
scans bar codes and takes voice commands, to restock their refrigerator
and cabinets.
Imagine
the Dash set free on the world and you have Amazon’s long-term hopes
for a phone. Sam Hall, an Amazon mobile executive, succinctly set forth
the agenda in an interview a few years ago: “We’re trying to remove the
barrier between ‘I want that’ and ‘I have it.’ ”
An
Amazon spokesman declined to comment on Wednesday’s event. There is
always the possibility, of course, that all the rumors about a phone
could be an elaborate head fake, and that the event will be something
else entirely — perhaps a kiss-and-make-up ceremony between Amazon and its suppliers, with several of which it has drawn swords.
No
matter what, the event has more hoopla than any Amazon release in
memory, indicating something big. First came a video showing a lot of
people oohing and aahing over something out of camera range. This was
taken by some as confirmation that the phone will have some sort of 3-D
capacity. That might pull in gamers, another group Amazon is
cultivating.
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