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Can Amazon’s Re-Entry in the Smartphone Arena Pay Off?

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Attractively priced, but loaded with ads

Amazon (AMZN), in order to keep its Prime membership popular, is offering two unlocked Android smartphones exclusively priced for Prime members. The company is offering the BLU R1 HD for $49.99, half of its retail price of $99.99.

Amazon’s second offer is the fourth-generation Motorola Moto G for $149.99, a discount from its retail price of $199.99. Although both phones are attractively priced, the ads displayed on the phone’s lock screen might not go over well with the users.

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Amazon stated that “the breakthrough pricing on unlocked smartphones is supported by personalized offers and ads, including deals and product recommendations, displayed on the phone’s lockscreen. When a customer sees an offer, they can tap to learn more about it or simply unlock their phone to dismiss.”

Amazon’s earlier bet on smartphones ended badly

In July 2014, Amazon launched its Fire Phone in the United States (IWB). However, the smartphone failed to impress users, and the company had to bear a huge inventory cost.

Amazon’s smartphone had some innovative features, but the company made a few mistakes that led to the device’s lack of popularity. The company priced its Fire Phone between $199–$299 with a two-year contract on AT&T’s (T) 4G LTE network. It also offered an unlocked phone for $649. Amazon eventually launched the device on T-Mobile (TMUS), but not on Verizon (VZ) or Sprint (S).

Users expected something simpler and cheaper from Amazon. Two months after the launch of the Fire Phone, Amazon started offering the device effectively for free with a two-year contract. It also offered the phone for $449 without a contract. By that time, it was too late as the damage had been done.

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