There seems to be potential for disruption there, except that Google Inc (NASDAQ:GOOG) is already trying its darnedest with the Nexus 4, which starts at $300 unlocked and off contract. The Nexus 4 is proving quite popular among Android enthusiasts looking for a stock Android experience, but the search giant was initially having a hard time keeping inventory on hand since manufacturer LG has a disincentive to cooperate since the device undercuts its own higher-end offerings.
It’s conceivable that Amazon could build a phone and sell it at cost for $150 to $200 unsubsidized and unlocked to undercut the Nexus 4. But then we’re talking about a very small subset of the broader market: the $150 to $200 unsubsidized price range at only AT&T Inc. (NYSE:T) and T-Mobile.
Unlocked phones typically use GSM, which would immediately take Verizon Communications Inc. (NYSE:VZ) and Sprint Nextel Corporation (NYSE:S) off the table if Amazon wanted to go that route. AT&T is already entrenched in subsidies and service contracts, and 84% of its smartphone activations in Q4 were iPhones, so Amazon probably wouldn’t gain much traction on Ma Bell’s network.
Much like in the tablet market, Amazon.com, Inc. (NASDAQ:AMZN) can be expected to target the U.S. market first because that’s where its content and services offerings are the strongest. Amazon will try its best not to blend in with the crowd, but the domestic smartphone market is simply too crowded already.
The article Is an Amazon Kindle Phablet Incoming? originally appeared on Fool.com.
Fool contributor Evan Niu, CFA, owns shares of Apple and Verizon Communications (NYSE:VZ). The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple Inc. (NASDAQ:AAPL), and Google.
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