After shaking up the tablet market with the release of the Kindle Fire last year, Amazon is reportedly looking at taking on the smartphone market with its own handset.
According to a Bloomberg report, sources close to the matter say Amazon is developing an Android and iPhone competitor together with manufacturer, Foxconn International. In line with this, Amazon is said to be looking to acquire wireless technology patents to complement the new product.
In November last year, Citigroup analyst Mark Mahaney predicted Amazon would enter the smartphone market with a device in the $150 to $170 price range.
Amazon's first foray into the hardware business was with the Kindle e-reader; this was then followed by the Kindle Fire, which shook the tablet market with its $199 price point. While sales were initially strong, they have since tapered off significantly. It is widely expected that Amazon will release a new version of the Kindle Fire later this year.
At the time, it was noted that Amazon appeared to be gunning directly for Apple, especially with the release of Amazon's own Appstore. The company's well-evolved online retail and content offerings also place Amazon in a strong competitive position.
Kindle Fire figures
In May, IDC market figures showed that Apple had reasserted its dominance in the tablet space in the first quarter of 2012, shipping 11.8 million iPads. Amazon, which took second place in tablet shipments in the fourth quarter of last year with 16.8% of the market, has dropped to just over 4% and third place (after Samsung).
Many interpreted the drop in shipments of the Kindle Fire as an indication that Amazon was losing ground in the tablet market. VP of industry analysis for the NPD Group, Stephen Baker, said: "This current firestorm around the Kindle Fire numbers is a perfect example of how mistaking shipments for sales leads the market to incorrect and faulty conclusions about trends and opportunities.
“These numbers don't measure sales volume of the Kindle Fire in the first quarter, rather they measure the small amount of inventory build-up Amazon needed to do in Q1 to replenish inventories.
“So how did the Kindle Fire do in the first quarter of 2012? Pretty darn well, thank you very much. According to NPD's Consumer Tracking Service, the Kindle actually sold 1.8 million units in the first quarter... Looking back, in Q4 2011 NPD's Consumer Tracking Service counted 3.8 million Kindles sold during the holiday period. And if you add up those two sales figures you get a number almost exactly the same as IDC's shipment number that we referenced earlier. And looking at the numbers from that actual sales perspective, the concept that Kindle Fire sales collapsed in Q1 becomes absurd.”
Tough market
In the smartphone space, a new offering from Amazon will have its work cut out in taking on a market dominated by Apple and Samsung.
Recent figures from ABI Research show Apple and Samsung currently have 55% of global smartphone shipments, and account for 90% of the market's profits. Smartphone shipments have grown 41% year-on-year, but many smartphone OEMs are not reaping the benefits.
Samsung leads global smartphone shipments at 43 million units, while Apple follows in second with 35 million units. Nokia trails in third with 11.9 million smartphone units shipped, followed by Research In Motion at 11.1 million units, Sony at seven million units, Huawei at 6.8 million units, and ZTE at 4.9 million.
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