Amazon’s smartphone was not launched as expected by some analyst, though users got a glimpse of how effective it could be. As Amazon’s 4G Kindle fire line starts providing phone data directly from its 4G network to American subscribers, it will be giving sleepless nights to cellular operators across the US, including the networks it tapped for bulk buying of minutes.The big 4 who dominate the huge north American market are Verizon, AT&T, Sprint Nexus and T Mobile. They have made phone calls relatively expensive in the US by creating an oligopolistic market and mixing up a whole number of tariff plans that cleverly build a comfortable margin for the cell operators. Though a dozen more small network operators function primarily in the regional segments , the price of a telephone call in the US is largely set by the big 4.
Now what happens if Amazon steps into this cushy market and starts providing telephony services from its 4G network to American customers at $50 or even $100 a year? That could be a game changer that wipes out the comfortable margins from the cellular networks like Verizon and AT&T as well as push the mobile phone market to testing times as the Amazon Kindle Fire device challenges the makers of the mighty iPhone or the Galaxy S. With tablets becoming the next favorite device to capture the minds and hearts of the gaming market it is natural that the smartphone market will feel the bump caused by customers weaned away to this device .
Business Insider analyst Jim Arrow has a point when he says “ Currently, Amazon is able to offer their plan for a flat rate by purchasing wholesale minutes from AT&T and then distributing them to paying customers. While AT&T would still make money off of Amazon, what happens if a majority of AT&T customers jump ship to the Amazon phone?” Though it is still early days for such a change to happen, the big boys of the internet world like Google, and Amazon are constantly eyeing the very lucrative cellular network margins and would love to step in given half a chance for such a game changing move.
I love to write on anything and everything under the sun from Project Management to Poetry, Economics to Travel and Technology. But most of all I love to write about our planet earth, about which you can read more in my blog Ecology to Economics. You may also meet me at http://www.twitter.com/ecothrust
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