It’s rude to speak ill of the dead, so let’s not talk about the Fire Phone, Amazon’s $170 million blunder. Amazon certainly hasn’t, and starting today, the company is back in the smartphone business. Sort of.
Rather than making its own phones, which didn’t work out so great before, Amazon is integrating ads—and, crucially, apps—into unlocked handsets from other manufacturers, and selling them at a discount. They aren’t Fire Phones, but something better: an opportunity to make real money.
Starting today, Prime members can get 50 bucks off the $200 Motorola Moto G or the $100 BLU R1 HD if they’re willing to put up with ads on the lock screen. (There’s also an extra $25 off the Moto for a limited time). These phones are startlingly cheap, but they’re not e-waste fodder. In fact, they’re the sort of budget devices that regularly top Amazon’s cell phone best-seller chart.
The Moto G is the latest generation of the best budget smartphone going. The BLU is a nice piece of hardware—HD display, aluminum body, Android 6.0—from a company with a rep for solid fit and finish at fire-sale prices. Better still, they’re both unlocked. The Moto G, available in either 16GB or 32GB (for $30 more), works on the four major US carriers. The BLU offers 8GB of storage and 1GB of RAM and doubles both for an additional 10 bucks. It works on AT&T or T-Mobile. Need more storage? No sweat. It’s expandable on both phones.
These aren’t iPhones, but if that doesn’t matter—and increasingly, it shouldn’t—this is a great deal if you’re a Prime member, which you probably already are. The catch? This discount exists so Amazon can place ads behind the lock screen, just like it does with the subsidized Fire tablets and Kindle e-readers. Swipe to unlock, and barring any personal notifications, a full-screen ad greets you. If you have Twitter mentions or New York Times news alerts to catch up on, you’ll skip the big ad and see them as usual, with an extra bar notification hawking the latest Kindle sale.
The other twist is that these devices come loaded with Amazon apps. Like, all of them. There’s shopping and Kindle, sure, but also the Amazon Underground app store, Audible, IMDB, and Amazon Video. Not to mention less mainstream apps like Goodreads, Prime Now, Alexa, Amazon Music, Amazon Drive, and Amazon Photos. Phew!
It’s easy to call this bloatware, but there’s a decent chance that Prime members would download many of them anyway. At the least, it’s probably easier to delete the apps you don’t want than hunt for the ones you do. Pre-installing Amazon Underground and Amazon Video is a particularly nifty trick, since you can’t get them on Google Play, and installing them requires an annoying dance with settings.
Whether the trade-off is worth it depends upon your tolerance for ads, your investment in Amazon’s ecosystem, and how often you look at your phone (46 times daily if you’re a typical American). For Amazon, though, these partnerships offer a way into market it flamed out of spectacularly.
Granted, two budget smartphones provide nothing approaching the scale or intent of the Fire phone program. That’s the point. Motorola and BLU don’t simply make good budget smartphones. They make good budget smartphones that Amazon knows it can sell, because it already does. If current trends continue, it will sell a lot more of them.
“I feel like there’s more opportunity there than before,” says Tuong Nguyen, a Gartner analyst who researches the smartphone market, about the budget space. “People are still unsure about the economy.” Although the US market is still largely comprises mid- and upper-tier shoppers, the shift toward up-front payments or installment plans is making people much more aware of a phone’s true cost. And you can’t find a decent smartphone that costs less than $50.
Meanwhile, every phone Amazon sells through this program represents a chance to make a lot more money down the line. Kindle and Fire owners spend twice as much on Amazon as customers who don’t own the company’s ereader or tablet, according to Consumer Intelligence Research Partners. BI Intelligence says the Kindle Fire advertising program alone generates $200 million in revenue per year. So even deeply discounted Moto G and BLU handsets should pay off. They could also bring more people into Prime, though it’s more likely that they’ll introduce current members to products and services they weren’t aware of. Amazon’s photo and cloud storage, for instance, is cheap as hell. The Alexa app leads straight to the Echo, which is a revelation.
Ultimately, the strategy speaks to the only ecosystem Amazon truly cares about: The one in which you buy stuff. And what gets you there more effectively—a single $650 device that only works on AT&T and has a homegrown interface, or a pair of cheap but solid handsets that work on the major carrier?
Amazon already knows which approach didn’t work. Now it’s trying something that just might.