Amazon's smartphone launch: 6 key questions

Amazon has a lot of parts that could make a smartphone a success, but questions abound. Here's a look at six big ones.
Written by Larry Dignan, Contributor
amazon screen

Amazon is expected to launch a smartphone on Wednesday in Seattle and expectations for the device are fairly low.

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The launch, which will reveal a few goodies such as 3D effects, is Amazon's first entry into the crowded and commoditized smartphone market. Amazon has a lot of parts that could make a smartphone a success, but questions abound.

Here's a look at six questions about Amazon's smartphone. We'll update after the event with the early answers.

1. Can Amazon's smartphone be more than a niche device? Analysts aren't going gaga for what has been leaked so far about Amazon's smartphone. No one is proclaiming Amazon's Kindle phone a real rival to Android devices or Apple. It's unclear whether Amazon's phone can even be No. 3. All of those low expectations are good for Amazon, which can surprise on the upside.

2. Will Amazon walk that line between walled garden helpful and handcuffing customers? Amazon's smartphone will likely be a small screen version of a kiosk for the retailer. The device will be all about Prime content and engagement. Much of my time is spent in Amazon's ecosystem---Prime video and music, storage, Kindle Paperwhite and apps for Kindle---so a phone won't be a big stretch. However, if Amazon goes too far it could suffocate folks in the other ecosystems.

3. Is there telecom business model innovation? Perhaps the best thing Amazon could do is change the economics behind smartphones and two-year carrier plans. Amazon's pricing should be closely watched as well as how it markets the device. AT&T is reportedly a key partner and it's unclear whether there will be pricing model innovation on tap.

4. How does a smartphone really boost Prime subscriptions, e-commerce and customer engagement? Now that Amazon has tablet and smartphone plays there should be better visibility on how a device owner spends time on the site, shops and handles repeat purchases. Ultimately, Amazon should get a better feel for customer acquisition through a device and the returns.

5. Does 3D sell? Amazon's claim to fame for its smartphone is a 3D effect that hasn't been revealed yet. Given the history of 3D it's hard to envision special effects being a real selling point. Amazon's 3D features, which have been leaked to some degree, have already been dismissed as gimmicky. But Amazon could surprise.

6. Can Amazon's ecosystem, hardware approach and applications make it a No. 3 platform? Amazon's Appstore has 240,000 apps, a sum that would put it behind Microsoft's Windows 8 and Windows Phone stores. Microsoft doesn't make a distinction between its two app marketplaces. Amazon has been trumpeting developer economics and monetization and has enough pull---as well as leverage with Android---that it could be No. 3 at some point.

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