Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Only Place Amazon Can Go

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

It's nearly a certainty at this point that e-tail giant (NASDAQ: AMZN  ) is preparing to launch a smartphone, which is now casually known as the "Kindle Phone." This isn't just unfounded speculation anymore; there's plenty of evidence that such a device is en route.

CEO Jeff Bezos has all but confirmed his interest in pursuing a smartphone, saying the hardest part will be to remain differentiated and not simply be another "me, too" device. Over the past couple of years Amazon has also been slowing hiring smartphone talent in the form of former Microsoft Windows Phone execs.

Make no mistake: a Kindle Phone is coming. But where is it going?

Where in the world is Amazon's content?
When it comes to geographical regions, Amazon's content offerings are strongest in the U.S., with little to nothing in most other parts of the world. Amazon has been expanding recently, most notably and naturally with e-books, but its music, TV shows, movies, and apps availability is focused primarily in the U.S. with a pinch of European offerings.

Amazon will have to launch the Kindle Phone in the U.S. first, since it won't seek hardware margins and will rely on its content catalog.

The process of elimination
Of the four primary carriers, chances are that Verizon Wireless and Sprint Nextel won't be carrier partners since they operate CDMA networks. If Amazon wants to truly be disruptive, it will follow in Google's (NASDAQ: GOOGL  ) footsteps and try to sell its device unsubsidized, unlocked, and off contract. Unlocked smartphones are typically GSM models because they have easily swappable SIM cards, leaving just AT&T (NYSE: T  ) and T-Mobile.

Amazon already has deals with AT&T as the service provider for its cellular-equipped tablets, and Amazon even finagled some incredibly cheap data plans, albeit with small data allowances. However, AT&T has always been predominantly an Apple (NASDAQ: AAPL  ) iPhone carrier -- a trend that has intensified over the years.

Source: SEC filings and conference calls.

Last quarter, the iPhone comprised 84% of all smartphones activated on Ma Bell's network. Amazon might launch on AT&T, but there's not a lot to go around outside of Apple's flagship, especially since AT&T is deeply entrenched in the subsidy model that I'm assuming Amazon is trying to skirt.

Pick a carrier, not any carrier
That leaves the "Uncarrier" as the perfect candidate for Amazon to focus on. T-Mobile is shifting from subsidies to financing programs, while pitching more affordable service plans. At the end of 2012, the No. 4 carrier had 26.1 million banded customers (excluding wholesale and MVNO connections).

While T-Mobile has ditched subsidies, it's also concentrating very heavily on beefing up its product portfolio. Not only is the carrier now finally getting the iPhone, but it's also Google's only official Nexus 4 carrier. T-Mobile will also carry the Samsung Galaxy S4, HTC One, and BlackBerry Z10. These are all devices that Amazon will compete with.

To its Amazon's credit, T-Mobile's device pricing is more transparent than other carriers', so Amazon can make its case more effectively and undercut as usual.

Amazon may technically launch a Kindle Phone on both AT&T and T-Mobile, but T-Mobile will be the main flame.

Everyone knows Amazon is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that's due for a correction. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2347137, ~/Articles/ArticleHandler.aspx, 9/26/2016 6:46:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:00 PM
AMZN $799.16 Down -6.59 -0.82% CAPS Rating: ****
AAPL $112.88 Up +0.17 +0.15%
Apple CAPS Rating: ****
BBRY $7.82 Down -0.09 -1.14%
BlackBerry CAPS Rating: *
GOOGL $802.65 Down -12.31 -1.51%
Alphabet (A shares… CAPS Rating: *****
MSFT $56.90 Down -0.53 -0.92%
Microsoft CAPS Rating: ****
S $6.65 Up +0.01 +0.15%
Sprint CAPS Rating: **
T $41.14 Down -0.14 -0.34%
AT and T CAPS Rating: ****