An overlooked line in Amazon's earnings release could mean it wants re-enter the phone market after its $170 million Fire Phone disaster (AMZN)
- Amazon said in its earnings report Thursday that it wants “customers to be able to use Alexa wherever they are.”
- That could mean getting back into phones, one analyst has theorized.
- Fire Phone — Amazon’s first attempt — failed spectacularly and cost the company $170 million.
- Follow Amazon’s stock price in real-time here.
A much-overlooked bit in Amazon’s earnings press release on Thursday — in which Amazon said “we want customers to be able to use Alexa wherever they are” — has one Macquarie analyst speculating that the e-commerce giant could be planning another foray into phones.
“We suspect, though this is admittedly speculation, that Amazon will have to re-enter the phone market either directly or indirectly in order to drive Alexa adoption,” Benjamin Schachter, the bank’s technology analyst, said in a note to clients Friday following Amazon’s record-breaking earnings report.
“We don’t see how Alexa can evolve to its fullest potential without being available prominently on the main device that so many people carry everywhere, the smartphone. It is hard to see how they don’t do this.”
Amazon’s first attempt with Fire Phone famously went up in smoke in 2015 after disappointing sales caused the e-commerce giant to take a $170 million write down and cease production of the products altogether. Now Amazon could use a new line of phones as its Trojan Horse to get Alexa — its Siri-competing voice assistant — into every part of its customers lives.
This time could be different for Amazon, other analysts have said. Amazon scored a clear victory from the European Union’s chief competition regulator in July when the court handed down a $5 billion to its main competitor Google, saying the search giant must support “forked” third-party versions of its Android operating system, which originally powered Amazon’s Fire Phone.
The decision would also allow Amazon to use Google’s popular apps like Gmail and Google Maps on its phone.
Currently, Alexa is available as an app, but still lacks a native input feature like Apple’s Siri or Google’s own voice assistant. Still, Alexa’s main gateway to customers’ homes is through Echo speakers and other hardware partners like Sonos (which recently filed for an IPO and will go public next week).
Amazon executive admitted in 2016 that Fire Phone failed because it didn’t differentiate itself well enough from competitors — something Alexa could do.
“The phone segment is very well-served,” Dave Limp, Amazon’s senior vice president of hardware, said at the time. “And we didn’t come out with a product at that particular point in time that was differentiated enough for customers such that it got the momentum that we needed to see … it just didn’t resonate to the next level of masses.”
Shares of Amazon rose about 1.2% in trading Friday following its earnings report and are up 55% since the start of the year.
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