Yesterday, I talked a bit about why I think the current generation of smartwatches, the Apple Watch in particular, are ridiculously overpriced.
To get the price of these things down, certain obstacles are going to have to be overcome. The main issue will be scaling out production so that component integration costs are minimized, much like that has been done with smartphones and tablets today with SoCs (Systems on a Chip).
However, there are other ways of bringing the costs down, and that would be to use the smartwatch/sports band device as a means of pushing product, services and generating follow-on revenue.
Traditionally, this has been known as the "Give away the razor but sell the blades" approach.
The company that has mastered this technique is Amazon, which has proven to be a formidable force in consumer electronics with its Kindle e-readers and tablets, and also recently their Fire TV, Fire Stick and their Echo media player and intelligent agent, the latter which will be shipping in volume to customers early this summer.
Now, I know what you are thinking. Their entry into the smartphone market was a total bust.
That's certainly true. But I think the Fire Phone design was over-engineered, and aside from a 3D visualization gimmick that developers had little interest in exploiting showed little differentiation from other Android products on the market, the kiss of death for the device was that it was hampered with a contract commitment on a single carrier, AT&T.
If Amazon were to produce a smartwatch, however, I think things would be quite different.
Ideally, I think Amazon would take more of a sports band/minimalist approach than a fully independent device approach. Like the Microsoft Band, it would have to be cross-platform compatible, and would need to be able to inter-operate with any iOS or Android smartphone on the market, just as their Store and Kindle apps do today.
Amazon has a few things that would make a "Fire Watch" or "Fire Band" a compelling product. The first of which is that the company runs the 800 pound gorilla of cloud services in the form of AWS, which could be used for personal data health analytics gathered from the watch's sensors which would be synced to the cloud via the smartphone or tablet of your choice using Bluetooth Low Energy (BLE) connectivity.
But even more importantly is what this means as a revenue generation opportunity for Amazon's ecommerce business. Your personal analytics would indicate calories burned and how many miles you walked, ran, or biked. It would know how many hours a night you've slept and could even constantly monitor your body temperature, oxygen levels and other key metrics, which could give you important notifications about your overall vitals.
That's a perfect opportunity for the watchface, at the appropriate time, to show you protein bars, athletic clothing and fitness accessories and all kinds of other stuff, which you could buy instantly with just a tap of a finger on the watch.
That's just what Amazon itself could do with health analytics. 3rd party developers could plug into this analytics cloud and sell Fire Watch apps that could do all sorts of other things depending on what you were interested in.
Besides body sensors and GPS, the watch could conceivably be equipped with a small laser diode or a low-resolution camera good enough to do UPC scans of products, so that whenever you were in a brick and mortar store, you could do instant price checks and then buy it cheaper on Prime, straight from the watch.
Because the purpose of this device would be to ultimately sell you products and services -- just like the Kindle, the Kindle Fire, the Fire TV and the Echo does -- the price of such a smartwatch could be well below its competitors. Amazon could conceivably offer this at a steep discount to existing Prime members, as it does with the Echo.
Or it could sell the watch with a free year of Prime to new customers.
Amazon also knows that people use their devices outside -- which is why that it is likely they would offer a touchscreen e-Ink version in addition to a color version, to cover the sporty/battery life conscious crowd at the lower end and the more fashionable types at the higher end.
Apple Watch may very well be front and center of consumers minds right now when considering a smartwatch. But don't count out what the folks in Kirkland's skunkworks are planning, because if Amazon is anything, it's a market disruptor.
Would you buy an Amazon smartwatch if it was priced right? Talk Back and Let Me Know.