Will Amazon produce a Kindle phone?

Back in August of 2010, I wrote a column titled, "Will Amazon produce its own Android tablet?"

To give credit where credit was due, the article was a spin-off of a piece that the New York Times Bits blog did about Lab126, the division of Amazon behind the Kindle, located in Cupertino, Calif., not far from Apple. The article suggested that Amazon was looking into producing more hardware beyond the Kindle and I thought that a foray into the Android tablet market seemed likely, particularly considering it dovetailed nicely with Amazon's e-reader/e-book venture.

Well, it took a little while, but the Kindle Fire is finally here, just a few weeks from actually shipping. So now that we can check that one off, I thought it worth asking what's next for Amazon in the consumer electronics space.

Sure, there are rumors of a larger 10-inch tablet (perhaps Amazon could call it the Inferno or Blaze), which could arrive as soon as early next year. But beyond that, I'm thinking about something a little smaller, a Kindle smartphone. After all, now that Amazon's skinned Android once with the Fire, it can certainly do it for a device with a 4-inch instead of a 7-inch screen.

In fact, that New York Times article back in 2010 didn't mention an Android tablet but it did talk about a potential Amazon phone:

Lab126 briefly discussed entering the mobile phone market to compete with Apple and Google, but the project 'seemed out of Amazon's reach.' But the [anonymous source] person said Amazon had not definitively rejected the idea of building a phone in the future.

In recent weeks, there's been some chatter about Amazon possibly picking up Palm's beleaguered WebOS, which HP bought for $1.2 billion and promptly ran off a cliff in the backseat of its TouchPad tablet. I don't believe Amazon would buy WebOs to put into a phone but it makes slightly more sense for it to buy it for its patents, as some have suggested.

Why don't I think Amazon has any interest in owning its "own" OS for a phone? Well, because it's all about the apps, and Amazon already has its Appstore for Android with plenty of developers already creating Android apps. The big problem with WebOS was that Palm (and later HP) didn't have any developer support and I'm not convinced that Amazon is ready to spend millions to get developers to make apps for its platform like Microsoft is doing with Windows Phone 7.

It seems clear to me that Jeff Bezos and Amazon have a very clear mission going forward when designing future electronics products. As Jeff Bezos said multiple times during the launch of both the Fire and new e-ink Kindles, "We are building premium products and offering them at nonpremium prices." That's Amazon's new mantra, and I suspect a Kindle phone with a two-year contract would be free. Alternatively, Amazon could also come out with a new pricing model for service that undercuts current carrier pricing. But a partnership with a major carrier like AT&T (which supplies data for Kindle 3G models) would seem more likely.

When I spoke to Russ Grandinetti, Amazon's vice president of Kindle content, at the launch for the Kindle Fire, he had this to say when I asked him about whether Amazon saw the Fire competing with the iPad:

For four years now with the Kindle, what we've tried to do is build devices that get out of the way. We did that with books and people really loved it despite some skepticism. Now we're taking Amazon's media businesses--in music, in movies, and even Web services--and we've tried to pull those together into a device that consumers love. We always think that's a recipe for success and we think we have a real good chance with Kindle Fire.

In other words, Amazon sees these types of mobile devices as a means to an end and that end is users consuming Amazon's goods and services. What better than a sexy, cheap (maybe even free), user-friendly Kindle smartphone to continue driving consumers toward those same goods and services Grandinetti was talking about, not to mention the Amazon Appstore for Android.

How long before Amazon does a smartphone? That I can't tell you. But there are still a bunch of open positions over at Lab126 and most of them are geared toward creating and eventually producing new Amazon mobile devices.

Of course, any time you get cellular technology and carriers involved, things get much more complicated. But I think it's only a matter of time before you see a Kindle smartphone; ultimately, Jeff Bezos knows that his company is going to have to compete directly against the iPhone if he wants Amazon to be Apple--or even beat it.