The Wall Street Journal report last week that e-commerce giant Amazon is planning to enter the smartphone market with its own handset expected for June is stirring a lot of debate regarding the company's pricing model in what looks like a saturated and well-served market.
According to the report, a smartphone with four front-facing cameras or sensors has been demonstrated to developers in Seattle and San Francisco over the last few weeks, with the capability to track the user's gaze, augmented reality features together with a glasses-free 3D-viewing experience.
The auto-stereoscopic 3D screen would serve the on-screen effects based on the user's head position (as detected by the front-facing sensors). You could certainly extrapolate that back-facing stereoscopic cameras would capture the real world in 3D to support the augmented reality features and match the user's gaze with the real-world items attracting the consumer's attention.
Once identified in the real world, these items could be searched and matched in Amazon's online database to come up with price-competitive offers. In retail stores equipped with Bluetooth Smart beacons, the geolocalized offers pushed to the consumer's smartphone could even be used by Amazon to fine-tune its contextual counter-offers.
Sure, the smartphone market is already dominated by a handful of players, all trying to leverage their hardware to scrutinize and influence consumers' spending habits. Google's Android OS gives the search engine giant a helping hand on personalized advertising across the majority of smartphones, including the company's Nexus series.
Last year, HTC and Facebook released a "low-cost" social-network dedicated smartphone that turns the unit into a full-featured Facebook engine, ready to deliver targeted advertising. The First, as it is called, is said to deliver an immersive Facebook experience with better integrated notifications. It also comes pre-loaded with Instagram for picture and video sharing.
If provided at a very attractive cost, Amazon's smartphone could just be another self-serving tool, a consumer tracking device purposely built to give the merchant a competitive edge in-store as well as online. It may come fully loaded with Amazon's apps and useful shortcuts to the company's retail services.
After all, Amazon has managed to dominate the e-book market by offering its Kindle e-book readers at a very low cost (at just the breakeven point or possibly at a small loss, according to some market analysts). The Kindle is merely a self-serving platform, a formidable promotional and sales tool for the company's online catalogue of real books and e-books.
Even if Amazon were not directly making a profit from selling this new hardware (say, if the smartphone were subsidized by the company's online sales), the user-generated data collected and analyzed by such a proprietary tool could well compensate the design effort. That's especially so if the new augmented reality feature means that 3D items from Amazon's online catalogue can pop up in front of the users' eyes, right in place of the real thing and at a better price.
A real-time price war could take place wherever you shop. If the practice ever became mainstream, would physical shops retaliate with special "no augmented reality" policies?
This article originally appeared on EE Times Europe.