Rumors are circulating that Amazon is getting ready to unveil a smartphone addition to its Kindle lineup. But is there room for a third wheel in the smartphone space, and if there is, who's more at risk from that; Apple's iOS or Google's Android.
The mobile space is currently dominated by iOS and Android. The former pulls in the biggest profits while the latter has the best sales, and between them command 95 percent of smartphone shipments. But if rumors are true, Amazon is getting ready to wade into that space with a new Kindle smartphone (Kindle Phone? Kindle Fire Phone?).
I'll leave the rumormongering and mock-ups to others, and focus more on the effect that this handset could have on the ecosystem.
So far it doesn't look like there's room for a third wheel in the smartphone arena. The once iconic BlackBerry has withered on the vine, while Microsoft's Windows Phone is suffering from a distinct failure to launch, despite teaming up with Nokia (although some might question the logic of Microsoft acquiring a company that was already floundering in the smartphone space).
And make no mistake about it, if Amazon enters this market, it will be a third wheel, because while the smartphone's operating system will undoubtedly be a fork of Android, and will have as much in common with that operating system as the platform driving the Kindle Fire tablets has. Not only will is sport a custom user interface, but it will revolve around the Amazon ecosystem as opposed to Google's.
Amazon has a lot on its side when it comes to being disruptive in the consumer electronics arena. Not only does it have a vast ecosystem of content all in place, and countless millions of customers, it's also a company willing to forego making a profit on the hardware in favor of taking a longer-term view. Amazon's hardware is usually competitively priced but innovative and packed with features. And with the Kindle Fire HDX Amazon has shown that it isn't shy about making a move on the enterprise and BYOD sectors too.
But Amazon also has steep challenges to face. The first is that as a single retailer it will have to shift tens of millions of handsets in order to make a dent in either the iOS or Android ecosystem. If we just look at Android alone, there are now over 1.5 million devices being activated daily. Then let's not forget that the Android ecosystem is dominated by a single player – Samsung. I've lost count of the myriad of tablets and smartphones this company currently has on offer. And it's a company that has a reputation for making good products.
Then, in the other corner is Apple. It might only have the iPhone and iPad lines, but it is a heavyweight fighter and there doesn't seem to be any sign of the shine searing off its products, with both lines selling well. And with new products coming out on a regular basis – along with high-profile keynotes and release events – I can't see Apple having much to worry about for the foreseeable future.
A market segment that is open for Amazon is the cheap end of the market. We're talking the sub-$200 market, perhaps even sub-$150. It's not a profitable market, but as we've already ascertained, this isn't something that worries Amazon. It's more interested in using the platform to sell other things to its customers.
It's also worth noting that Amazon doesn't disclose Kindle hardware sales, perhaps the best indication that shipments aren't the metric the company wants us to focus on.
So, can Amazon's Kindle smartphone shake up the iOS/Android duopoly? Maybe, but it won't be a shake-up in the traditional sense in that it will erode iOS or Android market share, but instead it will add to the standalone ecosystem that Amazon has created with the Kindle hardware. Kindle is a platform that Amazon uses to get people to spend more money on other Amazon products and services, and in this way it is a pretty unique business model. And to me, given the clout that iOS and Android has over the market, it may very well be the only way a third player can gain traction in the market. Taking the direct approach hasn't worked well for those who have taken it.
But the longevity of the Kindle line – going all the way back to the original ebook readers – proves that the world's biggest online retailer is prepared to stick it out.