Thursday, June 05, 2014

Rumble in the Amazon Jungle: The Absurdity of Launching a Smartphone

   Amazon announced some time ago that it was in the process of developing a smart phone to "compete with the iPhone." "Okay," the market said. There was a little bit of hype, a few articles on various online forums and publications appeared and then everyone promptly forgot about it. This was back in February as I recall. I must admit my memory is a little cloudy since I was studying for my medical exams at the time and I have yet to forget everything I've learned now that I've written them.

   I'm sorry, but am I the only one who has a bald spot created from scratching my head trying to figure this deal out? "Compete" is a dangerous word to use in this context. Just about anything can "compete" with something else. An Astra diesel can race against a Nissan GTR in the quarter mile and "compete," but its not going to fare very well. Now, had the headline read, "Amazon to release a smartphone that will equal the iPhone," then I probably would have cared. A Porsche 911 equals a Nissan GTR and not a coalminers run-about so I think you understand now where I feel Amazon falls in this competition.

   I have several problems with the whole charade because history will recall when the iPod came out several companies hastily came forward saying they too were going to release their own mp3 player that was going to be the greatest thing since sliced bread. Never mind that Apple had been developing and refining theirs for years before it was finally released, but sure enough companies like Microsoft (and their poorly conceived Zune), Compaq, Hewlett Packard, Dell, San Disk, Sony all tried and failed.

Early phone portability very similar to the iPod I have on my wrist at the gym

 Several attempts at portability throughout Apple's history

   Since then all the major players were once again caught off guard with Apple's development of tablet and touch-screen technology with the release of the iPad and iPhone. Sure enough a similar group of companies came forward, apparently with their pants down around their ankles, claiming they too would be releasing a touch screen product (Amazon among them). Its been several years and Apple has quietly dominated the market. Granted, a few products have come out I genuinely think are good such Blackberry's tablet that can actually run, ahem, Flash, and Samsung who's phones are quite popular and do have have pretty nice interface with an absolutely superb camera (shown below). It took Sony a long time but I even like the look of their Xperia.

   
   Doesn't it seem like Amazon is showing up to the fight a little late? I can remember the hilarity several years ago when Apple had already announced and released the iPad after-which Amazon announced there's which was (and still is) only able to produce a grayscale image and is being sold at cost. I understand they've tried to tie it in with their eBook publishing business, but even that has begun to shows signs of fraying at the edges as their relationship with publishers continues to be very difficult and quite problematic (this reported by MoneyNews today in fact). It's just that Amazon do the most obvious things, and quite belatedly, and yet their stock goes up 600% over five years. For goodness sake's, their P/E ratio is going on 480 while Apple's is only 30!
   
   One reporter for the website Seeking Alpha spoke with several friends at Amazon back in February and characterized Amazon's general strategy as, "git that the biggest and the fustest." Simply put, Amazon has always had a strategy of market share and quantity over quality and money making strategies. The Wire even reported back in 2012 that the heaviest object that Amazon shipped for free at the time weighed a ton (1,672 pounds actually if you include the packing materials). Some people did the math and thought it was impossible that they were making money on a purchase like that and might even be lucky to break-even. Sure they might generate a little customer loyalty with a sale like that but it's not like we walk down to Sears-Roebuck anymore to buy the latest transistor radio. If I want something, the convenience of the internet will take me to the company that does that the best, whether it's Amazon or not.
I'm not joking, this is it (without the guns of course) weighing in at 1,509 pounds without shipping materials.
   You can eschew the statistics anyway you want but as The Guardian points out 40% of the US market in smartphones belongs to Apple, and only Apple, whereas 51% is shared by all the Android phones. In the gladiatorial ring of smartphone combat it's Samsung versus Apple right now (and likely for a long time to come). Once again look at the companies who have come forward  to do battle with Apple, and much earlier when the technology was still nascent, and have since fallen: Nokia, Ericsson, Microsoft (again), Facebook, Blackberry and on and on. I can't quite come up sum up where I think Amazon's foray into the smartphone market is going, so here's Creedence Clearwater's "Run Through the Jungle" written at the height of the Vietnam War.


Copyright © Jakob Richardson 2014

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