Amazon has been making significant inroads into hardware, though its strategy here is different from that of most other players. The company is giving away its devices for cheap hoping to make up the loss by getting you to buy more stuff from the store.
Whether the strategy is working or not only Amazon knows, but the company is sticking to it.
After shocking the world with the first truly cheap 7 inch tablet and then coming back a year later with an equally cheap 10 inch tablet with some nice specs, the company is now getting ready to unveil its long rumored smartphone.
Amazon has clearly been working on this for a while since there have been rumors about an Amazon smartphone for years. People argued whether it was a good idea or not, whether it would make sense for the company and so on.
But Amazon has regularly defied the rationale of analysts and it may be doing it again if the latest rumors are true, Amazon plans to give its smartphone away for free.
According to former Wall Street Journal reporter Amir Efrati, Amazon is close to unveiling its first phone which it plans to offer for the low price of free.
It's unclear what strings will be attached to the "free" price label. Amazon may only be offering the phone free to its Amazon Prime subscribers. Or it may tie it to a one or two-year wireless contract, though the anonymous sources say that Amazon would give the phone for free with a contract or not.
A free smartphone is not unheard of with a long contract, in the US, the old iPhone 4 for example comes free with a contract. The rumor says that Amazon is talking to wireless carriers even if the phone will only be sold through the online store.
There is skepticism about whether Amazon could really offer a phone for free without a contract. While it has been able to push the price of its tablets down, they still cost a not insignificant amount of money to make. Same goes for a phone, even a low end one.