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Bilifuduo (96.87)

Amazon Smartphone a Smart Move?



July 08, 2012 – Comments (3) | RELATED TICKERS: AAPL , MSFT , AMZN

It seems as if the continuing trend these days in the technology sector is to simply try and catch up to Apple (NASDAQ: AAPL). Take, for example, Microsoft's (NASDAQ: MSFT) attempt to enter the iPad-dominated tablet industry with its newly unveiled Microsoft Surface; although the tablet has some very useful features such as a snap-on keyboard, many analysts wonder if it can significantly boost Microsoft's bottom line and chip away at the market share of the iPad. Indeed, a large part of the catching-up strategy is due to the success of Apple. Apple has been a juggernaut that has seen its stock soar 49.6% YTD and has been riding on the waves of huge growth in markets such as China. Of course, there have been setbacks for Apple; for one, it is constantly the target of lawsuits filed by its competitors and obscure Chinese companies. Also, fears have recently grown about slowing growth in the smartphone industry negatively impacting iPhone sales. 

Yet, a combination of these fears and Apple's presence in the industry has not deterred Amazon (NASDAQ: AMZN), the huge online retailer, from dipping its toe in the smartphone industry. According to Bloomberg, Amazon is working with Foxconn, the company best known for its controversy surrounding the production of iPhones, to create a smartphone. This move is also evident in Amazon's beefing up of activity concerning the acquisition of mobile phone patents. The company has already hired renowned patent manager Matt Gordon and is setting up meetings with companies that hold wireless patents.

 Full analysis: here.  

3 Comments – Post Your Own

#1) On July 08, 2012 at 9:10 PM, ravens9111 (< 20) wrote:

This stock is already priced to perfection. Everyone thought the Kindle Fire was going to be an iPad killer. How long did that last? Google Nexus and the mini iPad will dreail the Kindle Fire in its tracks. There is already so much competition in the smartphone space, it will yet again be another venture where they can generate revenue, but sell for a loss. At what point will investors realize that profits matter? Who cares if revenues go up when they sell these new gadgets for a loss? What if this new smartphone is not successful and they lose a boatload of money on it? The stock will come tumbling down. Weak retail sales numbers will affect Amazon when they announce earnings. Also, you can't forget that states are enacting legislation that will force sales tax on Amazon online sales. What will Amazon do? Are they going to help the consumer by lowering prices even more so those tiny profit margins get squeezed even more? 

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#2) On July 09, 2012 at 4:53 PM, Valyooo (32.71) wrote:

I don't understand why AMZN squeezes its own margins.  They are already more convenient than driving to stores to shop...even if they were the same price, I would still shop there.

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#3) On July 11, 2012 at 12:38 PM, Melaschasm (< 20) wrote:

With the success of the Kindle Fire, it makes sense for Amazon to expand further into the mobile computing market with a few smartphones.

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