Amazon likely to announce 3D smartphone at June 18 event

Amazon (NASDAQ:AMZN) said it will hold an event in Seattle hosted by CEO Jeff Bezos on June 18 for a new device unveiling--the company is widely expected to announce its much-rumored 3D smartphone.

The retailing giant's announcement of the event on Twitter included a picture of a thin, black device with Amazon's name on the back

Amazon also released a video showing actors holding a device off-screen and reacting to it. The actors' reactions in the video seem to indicate that the gadget will have some sort of 3D experience. "It moved with me," one person says.

Source: Amazon

Rumors of an Amazon phone have been brewing for years, but they picked up steam after a mid-April Wall Street Journal report that said the online retailer will release a smartphone in the second half of 2014. The report said the company has been showing off versions of the handset to developers in San Francisco and near its headquarters in Seattle, and that Amazon aims to announce the phone by the end of June and start shipping phones by the end of September, ahead of the holiday shopping season (and around the time Apple (NASDAQ:AAPL) will likely introduce the iPhone 6).

The report, citing unnamed sources, also said the phone will have a screen capable of displaying seemingly 3D-images without special glasses by using a retina-tracking technology embedded in four front-facing cameras, or sensors, to make some images appear to be 3D, similar to a hologram.

Later, BGR reported that the phone will use a combination of cameras, sensors and software to enable new gesture controls for the user interface, such as the ability to tilt the devices so that it displays additional information on the screen without the user having to touch the phone. Those details seem consistent with the actors' reactions in the video Amazon released, which showed people moving their heads around to view the device.

The business model for the phone is somewhat unclear. In April, BGR reported that the phone will use "Prime Data," which could be part of AT&T Mobility's (NYSE: T) "Sponsored Data" program, in which companies foot the bill so that users do not incur data charges when accessing their services. Or Amazon could give users free access to Amazon's "Prime" services online.

A smartphone would give Amazon a new hardware platform to sell ebooks, songs and movies, alongside the company's Kindle ereader and Kindle Fire tablets. In April, Amazon unveiled a $99 TV box called Fire TV. Amazon typically has tiny margins or loses money on hardware but makes it up with content sales. 

If Amazon's phone follows the path it has taken with its Kindle Fire tablets, the phone will use a forked version of Google's (NASDAQ: GOOG) Android platform without access to the Google Play store for apps. While the Kindle Fire devices have acted as supplements to smartphones, it could be difficult to get customers to give up Android phones or other smartphones with ecosystems they have become locked into.

"Amazon apps are available on most smartphones and tablets, and provide an extended mobile reach, but these apps do not benefit from the level of consumer engagement that is seen on Amazon's own devices," Analysys Mason analyst Ronan de Renesse said. "It is this integration between Amazon services and Amazon devices that drives consumer spend and, ultimately, revenue for the company. According to Analysys Mason's latest tablet survey, 70% of Amazon Kindle owners paid for apps, compared with 65% for Apple iPad."

De Renesse also noted that key mobile players Apple, Facebook (NASDAQ: FB) and Google "have entered, or are planning to enter, the ecommerce space which Amazon dominates. This is therefore in part a defensive strategy."

The analyst added that Amazon already has many of the assets needed to successfully launch a smartphone, including a known brand, the ability to offer quality devices at a lower cost than most competitors, a powerful distribution channel and an existing ecosystem of content and services. De Renesse said Amazon "will not and does not intend to become a global smartphone manufacturer. Amazon's smartphone launch roadmap will be similar to its Kindle Fire range, targeting only a few select countries, starting with the U.S. and the UK."

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this The Verge article
- see this GigaOM article

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