Later today, Amazon is expected to announce its first very own smartphone. Smartphones will be the third hardware category Amazon enters after having successfully introduced its Kindle e-readers and Kindle Fire tablets.
In case you’re wondering why Amazon would enter such a competitive market at such a late stage, consider this 2012 quote from the company’s founder and CEO Jeff Bezos: "We want to make money when people use our devices, not when they buy our devices". In other words: Amazon wants you to use its devices to buy more of all the stuff (physical and digital) the company has to offer.
Amazon’s strategy of locking its customers in can nicely be illustrated using the example of Amazon Prime. Offering perks such as free (and faster) shipping, a Prime subscription makes buying from Amazon a lot more attractive than buying from another online retailer. The results of a recent survey show that Prime members on average spend a lot more money on Amazon than non-Prime customers, and it can be safely assumed that the same will hold true for future Amazon smartphone users.
Amazon Prime Members Heavily Outspend Non-Prime Customers
Description
This chart shows how much Amazon Prime members spend on Amazon.com compared to regular customers.
