There's that old saying that the best things in life are free--and now Amazon has apparently decided that this maxim would make a formidable business plan.
The retail giant is reportedly considering a scheme that would give away free smartphones to consumers, possibly to those who subscribe to Amazon Prime, a service that provides free two-day shipping of physical purchases, a library of free streaming video, and various Kindle ebooks that can be borrowed indefinitely. The phone would likely run Amazon's version of Android, which is already deployed on Kindle Fire tablets.
A person familiar with Amazon's plan reportedly told Jessica Lessin--a former Wall Street Journal reporter who nows runs an eponymous technology blog--that Amazon is talking with various wireless carriers about offering the phones for free through its website. Lessin reports that Amazon would only proceed after working out "financial arrangements" with other hardware manufacturers.
Amazon's purported business strategy sounds dubious on paper, but let's not forget that the company's Kindle Fire practically followed the same "give it away for free" approach when it launched: It was sold at near zero margin, but provided (and continues to provide) a strong platform for digital sales.
All that said, an Amazon phone--free or otherwise--would have to compete in a much more crowded smartphone market dominated by Apple and Samsung, and clogged with a large field of also-rans. Whether a free phone would be enough to steer consumers away from the top players would prove to be an interesting experiment.