Amazon seen launching smartphone in 2012

Having already made the move into the tablet space, Amazon could launch a smartphone as soon as next year, one analyst predicted this week.

Based on supply chain checks in Asia, Citigroup believes that Taiwan-based Foxconn International is developing a device in conjunction with Amazon, All Things D reported on Thursday, citing a research note from analyst Mark Mahaney.

"We believe an Amazon smartphone will be launched in Q4 2012," the note read. Citigroup suggests that the phone could cost $150-$170 to make and will likely sell for close to that price, or even lower.

"For a normal brand like HTC, they [would] need to price the product at US$243 to make 30% gross margin. If Amazon is actually willing to lose some money on the device, the price gap could be even bigger," Mahaney said.

Amazon launched its Kindle Fire tablet earlier this month with a retail price of $199, a price point that not only undercuts rival products on the market, but is also lower than the device costs to manufacture. According to IHS, the tablet costs $201.70 to produce.

By contrast, Apple's iPad retails at $499 and upwards. Earlier this year the research firm estimated the bill of materials for a $700-plus iPad at $320, while the similarly-specced Motorola Xoom cost $359.92 to produce and retailed at $799.

Returning to the planned Amazon phone, according to All Things D, Citigroup's Mahaney implied that it will be an Android-based device by saying that Amazon will have to pay an OS royalty to Microsoft; the software giant has signed licensing deals with a number of vendors that use the Android OS thanks to owning a number of patents used in the Google operating system.

Citigroup believes the device itself and a number of components will be manufactured by Hon Hai's TMS business group, which also makes the Kindle e-reader and the 8.9" Amazon tablet. It also predicts it will feature Texas Instruments' OMAP 4 processor and Qualcomm's dual-mode 6-series standalone baseband.

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01 June 2020

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