The possible move illustrates an important aspect of the evolution of what we used to call “the mobile phone.” Amazon seems to be thinking that the smart phone is another important content consumption platform it wants to optimize for Amazon content. Tablets are content consumption devices
The perhaps-logical thinking is that as the new Kindle Fire features an optimized version of Android that features easy access to Amazon content of all sorts, so a smart phone could be optimized to facilitate Amazon content purchases.
Amazon might be willing to bet that since smart phones already are content consumpton platforms, as are e-readers and tablets, it needs to seed the market with lots of devices optimized to consume Amazon content.
Separately, Sony Corp. is considering launching an Internet-based alternative to cable-TV service, the Wall Street Journal reports.
The Japanese electronics and entertainment company apparently has approached several big media companies that own TV channels to negotiate the rights to offer TV channels over the Web to U.S. consumers, the people say. Sony wants to sell cable-style video
But what Sony wants to purchase is rights to a selected number of core channels that would allow Sony to sell the package at less cost than s typical cable TV, satellite or telco video subscription. Whether Sony can be successful is the issue.
But both developments illustrate that the base of potential screens is exploding, consumer behavior is changing and appetite for subscription video could be converging with those other trends. We still do not seem to be at a tipping point, at least where traditional video entertainment is concerned.
But the background conditions represent mounting potential for change. Amazon’s potential moves simply highlight the explosion of potential new screens, including tablets, e-readers and smart phones.
“Based on our supply chain channel checks in Asia led by Kevin Chang, Citi’s Taipei-based hardware research analyst, we believe an Amazon smart phone will be launched in the fourth quarter of 2012,” Citi analysts say. Amazon smart phone?
The analysts also believe Amazon will offer the phone at attractive prices to mobile service providers. What is important to note, Citi says, is that Amazon does not need to make money on hardware.
Hence, it can sell a smart phone to carriers at $170 in the fourth quarter of 2012. For a normal brand like HTC, devices must then be priced at $243 to make 30 percent gross margin.
If Amazon is actually willing to lose some money on the device, the price gap could be even bigger. But content still is king, in the sense that rights holders and networks make the critical licensing decisions.
It isn’t clear how much chance Sony will have to get the programming it wants. Content owners, particularly the networks, have been unwilling to license channels on terms less favorable than what now is the case for cable, telco and satellite providers.
It seems unlikely that networks will want to jeopardize their substantial legacy revenue streams even to pick up one additional distributor such as Sony.
Sony also wants to distribute only to Sony-made devices including PlayStation gaming consoles, television sets and Blu-ray players.
Sony has sold approximately 18.1 million PlayStation 3 consoles in the U.S., according to the latest data from tracker NPD Group Inc., and many homes have other Internet-connected Sony devices as well.Sony Considers Internet Rival to Cable TV
