Amazon may add smartphones to Bezos’ deep game against… everyone

The consensus of market watchers is that Amazon plans to debut a smartphone this week, attempting to break into a business that is dominated by Apple and Samsung. Or, looking at it from the standpoint of operating systems, breaking into a business dominated by Apple’s iOS and Google’s Android. Or perhaps most helpfully, breaking into a business dominated by the Google Play Store’s 1.5 million apps and the Apple App store’s 1.2 million apps. While Amazon has been selling Kindles since 2007, the company has attracted under 190,000 apps to the Kindle app store.

The Kindle is the most successful e-reader yet released, and Morgan Stanley estimated Amazon sold $3.57 billion worth of Kindle e-readers and tablets in 2012, $4.5 billion in Kindle device sales in 2013 and $5 billion in Kindle device sales in 2014. That’s a lot of Kindles, considering the price point of $200 for a Kindle Fire HD with 16GB.

The buzzerati have been focused on the 3D photography and display gimmick that is likely to be unveiled with the Kindle Phone (I am presuming that the branding opportunity is just too great to drop the Kindle name, and come up with something new, although Amazon phone might work, too).

Amazon has recently announced a music streaming service — Amazon Prime Music — which is overshadowed by others. Spotify has over 20 million songs available, while Amazon has only a million. It’s been pointed out that only one of the top 10 in the Billboard top 100 was available on Amazon Prime. But they have starting down the path. This is an additional to streaming video that has been available for a considerable time.

But my real interest is the possibility of Amazon pushing beyond consumer sales and commerce via smartphone.

In November, Amazon announced a virtual desktop service — Workspaces — hosted on Amazon’s EC2 platform, which I reported on at the time in Amazon announces WorkSpaces, and shifts Kindle into business tool. Workspaces provides a full Windows 7 desktop experience, and various levels of Office apps, with prices ranging from $35 to $75 per month per user, include Microsoft Office Professional. The productivity apps include Outlook, Word, Excel, Powerpoint, Access, OneNote, and Publisher. A virtual file store is mapped to the desktop’s D: drive, and Amazon offers a various options for varying amounts of space.

Workspaces best thought of as a counter to Microsoft’s efforts rolling out Surface, which have been relatively fruitless.

My sense is that Amazon is building all the pieces for a new enterprise stack while making it seem like the consumer play is their only goal. Yes, he wants to sell you everything in the world, from crayons to canola oil, and that includes mobile devices, the apps and media on those smart devices, and the computing cycles to run those apps.

Amazon is a leader in cloud computing services, with millions of companies running customer-facing and internal applications on Amazon Web Services. A new generation of Kindles and Kindle smartphones is definitely in the works. The company can offer — in time — an unprecedented stack for developers to build on, and for companies to host their computing stack on.

My prediction? Amazon will build out the pieces in this computing stack, and will becoming a lead player in enterprise computing — from cloud to mobile hardware, productivity solutions, and ultimately, enterprise software. And — like Apple, who is moving in this direction — Amazon will offer tools to make it easy for developers to roll out apps on those smart devices, to store data and files in the AWS cloud, and to run templated backends on AWS. They will figure out how to make app development and deployment easier than it’s ever been.

However, don’t expect the big picture to get much play this week. You’ll be hearing a great deal of 3D photography and displays, and the multidimensional strategy that Jeff Bezos is working behind the scenes won’t be talked about at all. But Bezos is operating like a master of the game of Go, and the announcement of the phone is just like the setting down of a single stone. And then, a few stones later, it becomes clear that he had encircled his opponent with that single stone.

Relevant Analyst
Stowe Boyd

Stowe Boyd

Lead analyst, future of work Gigaom Research and stoweboyd.com

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