There are two types of companies: those that work hard to charge customers more, and those that work hard to charge customers less. Both approaches can work. We are firmly in the second camp. – Jeff Bezos, founder and CEO of Amazon.com
There is a rumor circulating that Amazon.com will release their planned smartphone for… wait for it… FREE! It is unclear what strings may or may not be attached to a “free” Amazon smartphone, but it would take quite a few strings to make this a bad deal.
If this rumor pans out, I think it is an excellent move on Amazon’s part. Amazon has an often criticized, yet indisputably effective, business model of spending large sums of money in order to improve customer satisfaction and grab additional mindshare. This approach to business may hurt profit margins in the short term, which is why some financial analysts knock Amazon, but it positions them beautifully in the long-term. The proof of this is Amazon’s massive marketshare today. When first launched, the company had gigantic hurdles to be overcome, and doing so required a lot of effort, resiliency, and money. But their steadfast, long-term view revolutionized online shopping and our expectations of that experience. And now Amazon is a household name, is one of the largest corporations in the world, and has a fan-base whose loyalty and attachment rivals most cults (I would consider drinking Amazon’s Kool-Aid).
We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better. – Jeff Bezos, founder and CEO of Amazon.com
A smartphone for free, or hell, even only a low price, would fit in well with Amazon’s approach to business. With a mediocre phone, the additional customers that they will attract, when combined with the mindshare gained by their bold move, would recoup their money in a few years. But given their very strong showing with the Kindle Fire and the probable similarities between the devices, I am confident that any smartphone they release will be very good, and will make them a very healthy profit when all is said and done.
Amazon announced on September 9 that this rumor is untrue. No smartphone will be released in 2013, and even if it was, it wouldn’t be free.