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updated: 6/5/2014 8:43 AM

Amazon said to be ready to unveil smartphone to vie with Apple

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  • Amazon.com Inc. is planning to introduce a smartphone later this month, according to a person with knowledge of the matter, plunging the world's largest online retailer deeper into the competitive mobile-device market.

      Amazon.com Inc. is planning to introduce a smartphone later this month, according to a person with knowledge of the matter, plunging the world's largest online retailer deeper into the competitive mobile-device market.

 
Bloomberg News

Amazon.com Inc. is planning to introduce a smartphone later this month, according to a person with knowledge of the matter, plunging the world's largest online retailer deeper into the competitive mobile-device market.

Amazon tweeted yesterday that it was holding an event in Seattle on June 18 hosted by Chief Executive Officer Jeff Bezos for a product unveiling. The post included a picture of a black, thin device with Amazon's name in silver emblazoned on it. Mary Osako, a spokeswoman for Amazon, didn't return a call for comment.

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A smartphone from Amazon would ramp up its rivalry with Apple, which makes the iPhone. The companies are increasingly going head-to-head in devices such as tablets and in Web services including online entertainment, as they strive to be digital gateways to consumers. Mobile is central to that effort as more people carry gadgets and do their computing on the go.

"This is a play by Amazon to get a stake in the most ubiquitous device category there is," said Jan Dawson, a technology-industry analyst who runs research and advisory firm Jackdaw.

Amazon announced the June 18 event with a note to customers, developers and press to request an invitation to attend. A video accompanying the tweet showed people moving their heads around to view a device that's just out of sight, shot from different angles, implying the phone may have 3-D viewing capabilities, a feature reported earlier by The Wall Street Journal.

Diversifying Amazon

Bloomberg News reported in 2012 that Amazon was developing a smartphone that would run on Google Inc.'s Android operating system. Foxconn International Holdings Ltd. was working with Amazon on the device, people familiar with the matter said at the time.

Amazon is entering a smartphone market that grew 21 percent last year to $338.3 billion, according to researcher IDC. The market by shipments in the first quarter was dominated by Samsung Electronics Co., which has 31 percent market share, and Apple, with 15 percent.

A smartphone would give Amazon a wider range of hardware devices to bolster its diversification into digital books, songs and movies. The company's gadget lineup already includes the Kindle e-reader and Kindle Fire tablets. In April, Amazon introduced a $99 TV box for watching digitally delivered shows and movies, called Fire TV.

Profits Later

The company, with razor-thin profit margins that have raised hackles among investors, has shown that it's willing to lose money on hardware with the goal of later making money from sales of entertainment content like videos and music, or purchases from Amazon's store.

"Amazon's play here isn't to make a ton of money off smartphone sales; it's to get people to spend more money with Amazon as a whole," said Dawson.

Bezos has been pouring cash into new initiatives. Amazon's first-quarter expenses rose 23 percent, the same rate as revenue growth. With investments anticipated to continue for the foreseeable future, the company forecast an operating loss for the current quarter of $55 million to $455 million. A smartphone would illustrate how far Amazon has moved from its roots as an online book seller.

As it preps the new device, the company is entangled in a public spat with one of the world's biggest book publishers, Hachette Book Group. Amazon has blocked the sale of some titles as part of the dispute during negotiations between the two companies.

Amazon shares fell less than 1 percent to close at $306.78 yesterday. The stock is down 23 percent this year, compared with a 4.3 percent rise in the Standard & Poor's 500 Index.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1bloomberg.net To contact the editors responsible for this story: Pui-Wing Tam at ptam13bloomberg.net Jillian Ward

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