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There’s no failure more spectacular in Amazon’s history as a corporate entity than its failure in the smartphone business.
On June 18, 2014, Amazon stepped into the smartphone market when they announced the first generation of the Fire Phone. The Fire Phone was a 3D-enabled smartphone developed by Amazon.com and manufactured by Foxconn China.
But, 27 August 2015, Amazon stepped out of the smartphone business, right through the way they stepped in; the failure of their smartphone business.
But 2019, almost 5 years later, as the online retail giant competes with Google and Apple to power the world’s smart homes and cars of the future, that lack of a mobile device have left a very big vacuum that really needs to be filled up if Amazon is going to remain a big force to reckon with in this industry.
To fill in this space, Amazon is considering buying Sprint owned prepaid cellphone wireless service ‘Boost Mobile’.
Boost is a mobile virtual network operator, meaning it doesn’t own the wireless infrastructure over which it provides its service. It offers pay-as-you-go plans with no long-term contracts which often suits low-income consumers, as well as those with bad credit and senior citizens.
If the deal pulls through, Amazon have a lot to gain here. First, they could bolster their Alexa smart-assistant business and also fasten their grip on the smart device industry while luring consumers through low-priced devices.
That could persuade consumers to use Alexa, which has largely been homebound, on the go.
Also, it would likely price its phone plans disruptively low and bundle them in some way to drive more Prime memberships.
The company could offer mobile phones on which its Alexa service features prominently. That means taking another try at making its own phones, this time, aiming at doing it right or they could just cut deals with manufacturers to put Alexa front-and-center on their devices.
But Amazon could also use the carrier services to launch a new breed of Alexa-enabled devices, with wireless connectivity built in, the devices wouldn’t need to connect to WiFi networks or need to be tethered via Bluetooth to mobile phones to tap into the internet-based servers that deliver Alexa’s services.
They could also make a twist into baking alexa into headphones. Giving rise to phones that could respond to voice queries without having to launch a mobile app.
Amazon Echo Auto, a gadget that brings voice services to a car and is currently only available via invitation, wouldn’t need a phone to connect to the Internet.
Given the fierce competition in the mobile phone market right now, Amazon can use this opportunity to create entirely new devices that would define a new category.
Amazon won’t be the only party that would profit from this deal, Sprint and T-Mobile too would profit greatly from it.
In April 2018, T-Mobile CEO John Legere took to Twitter to officially announce a merger between Sprint and T-Mobile.
But the $26 billion merger between the third- and fourth-largest carriers in the U.S has met some obstacles since its announcement and has been drawing forward and backwards since then.
Reason for the delay in approval being that, FCC regulators are keen on the issues of competition. They don’t want the number of competition to reduce from 4 players to three.
In a bid to satisfy regulators reviewing the T-Mobile US and Sprint deal, the companies pledged last month to divest Boost Mobile to a third party following the deal’s approval, among other concessions. Sprint and T-Mobile US also pledged in a regulatory filing that the combined company will offer six years of access to its network “at wholesale rates” to Boost’s buyer.
After months of seeking approval, The U.S. government’s objections to the merger between Sprint and T-Mobile are starting to evaporate as FCC Chairman Ajit Pai and Commissioner Brendan Carr both signaled their support for the merger.
Their backing is based on the two companies’ promise of rolling out an extensive 5G network, commitment to accelerated in-home broadband access to currently underserved communities across the country and in rural areas, and promise of increased competition in the U.S. wireless market.
So, getting the ‘Boost’ deal to work with Amazon is part of a desperate move to fully get the US government’s approval on the merger between Sprint and T-Mobile which the two network companies needed so badly so as to stand a chance in the competition with Verizon and AT&T. Verizon and AT&T are far bigger than either of the two companies. A merger would create a stronger competitor.
According to reports from research firm, eMarketer, the company now holds a 63.2 percent share of the U.S. smart-speaker market in 2019. But that’s not enough.
100 million devices now run with Alexa have been sold, including products made by other companies that use the technology.
There are more than 3.2 billion phones worldwide running Google’s Android operating system, while in January, Apple announced 900 million iPhones were in use globally.
When compared to the number of mobile phones running software from Google and Apple with their individual digital-assistant technology installed, 100 million devices Alexa is currently assisting digital is just a child’s play.
Apple & Google are also fierce competition to Amazon’s smart home business because they both have their own voice-activated speakers to compete with Amazon’s Echo business.
So, holding 63.2% of smart home speaker market doesn’t cut it for Amazon.
The lack of a successful mobile phone business has largely relegated Alexa use to customers’ homes.
The market share would have been higher if the vacuum created by the absence of a smartphone business never existed at all.
It’s safe to say, Alexa is doing great in the connected home business, but the minute users step outside of their connected home, Alexa abandons them
That gives Amazon’s two Silicon Valley rivals significantly upper hand above Amazon.