This Is Why Amazon Will Do A Phone

Amazon Earned Over $600 Million in Ad Revenue Last Year

The shift to mobile. Numerous publishers have struggled to keep pace as consumers have shifted time away from desktop devices to smartphones and tablets. Amazon, along with the rest of the marketplace, will likely face continued challenges as digital ad dollars shift with them to the few companies with strong mobile ad offerings — Facebook, Google and Twitter, to name a few. Still, Amazon does already have a strong retail presence on both sets of devices, and accounts for a large share of US retail mcommerce sales, which could give it an advantage over competitors. At the same time, consumers remain far less likely to make purchases on mobile devices — something that has historically kept cost-per-click (CPC) ad rates on mobile search ads relatively low compared with desktop CPCs, and likewise for mobile search ad revenues as a whole.

Bezos never rests.

And he famously said:

We want to make money when people use our devices, not when they buy our devices,

And everyone thought he was talking about buying from Amazon.

No, he meant the ads on the devices.

Amazon makes money from ads even when you’re not buying anything from Amazon.

With Amazon’s purchase of Liquavista’s screen technology, everyone foresees a color Kindle.

I’m not so sure about that.

People use phones in bright sunlight more than they use a Kindle that way. Simply because people use their phone more than they use their Kindle.

It would make sense for Amazon to first offer a phone with exclusive screen technology rather than in an eBook device. There’s simply more money in phones than in Kindles (eInk or tablet). And, to the point, there’s more advertising money in phones.

Also: Liquavista’s screen technology would boost battery life, which is a huge selling point. It would appeal to everyone who needs to charge their phone more than once a day (and all those people who must bulk-up their phones with a Mophie Juice Pack or carry a charger).

Taking a phone as a given, the only questions that remain are pricing, sales outlets, carrier arrangements, and services.

Don’t forget that Amazon also owns a mapping company.

4 Comments

Filed under Amazon Kindle

4 responses to “This Is Why Amazon Will Do A Phone

  1. You’re basing a prediction about a Kindle smartphone on some analyst’s wild-assed guess about ad revenue? Seems awfully thin evidence to me.

    Also, you might want to read that quote again. It say that mobile ad payment rates are pitiful. That sounds like it defeats your “ads on mobile” argument.

  2. NOW you’re thinking about these displays in a bigger way. I’m skeptical of Amazon’s potential market share in a “me-too” phone (Samsung’s Life Companion ads are looking pretty good these days), but your argument is equally valid for a tablet, isn’t it?

    • mikecane

      No. People tend to carry phones with them all the time, not tablets. The ad game is all about reaching eyeballs and making impressions — aside from outright sales.

  3. Wish I was as sure of this as you. If I was, I would buy some Amazon stock tomorrow. I just can’t convince myself that this will happen. Thanks for the tip even though I won’t use it. Can’t see the carriers giving Amazon this kind of break.

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