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Amazon expected to introduce smartphone this week

Hold the phone: Amazon wants to burrow even deeper into your life.

The retailer is expected to introduce a smartphone Wednesday at an event in Seattle, a long-rumored project that aims to close any remaining gap between the impulse to buy and the completed act.

Amazon has spent the past several years furiously investing billions of dollars on multiple fronts: constructing warehouses all over the country to deliver goods as fast as possible; building devices as varied as tablets and set-top boxes; and creating and licensing entertainment to stock those devices.

It adds up to a wildly ambitious venture without precedent in modern merchandising. Wall Street has generally cheered as competitors — an ever-growing group that includes Wal-Mart, eBay, Apple and Google — regard these activities with increasing unease. Customers, meanwhile, are propelling Amazon toward the rarefied ranks of companies with revenue of $100 billion.

The phone is the last and most crucial link in this colossal enterprise. It is a singular gamble for a company that, for all its technology components, is still primarily a merchant. Because even the smartest tech companies have trouble with phones.

When it comes to smartphone profits, Apple and Samsung divide them up, leaving crumbs for every other manufacturer. At least in the United States, phones are a mature market, with 120 million sold last year.

Now Amazon is giving this brutal business a shot. On the one hand, analysts say, it has no choice. On the other, the rewards could be tremendous.

"Mobile is asserting not just its utility but its supremacy," said James McQuivey, an analyst with Forrester Research. "If you're Amazon, you're worried you're going to be cut out of the next big interface. So you jump in and make yourself relevant."

In building a phone, Amazon has advantages other phone makers did not. It can sell to its 250 million customers without a middleman. It can bundle features with the Amazon Prime membership club, as it just did last week with a new streaming music service.

There is always the possibility, of course, that the rumors could be an elaborate head fake, and that the event will be something else entirely — perhaps a kiss-and-make-up ceremony between Amazon and its suppliers, with several of which it has drawn swords.

Amazon expected to introduce smartphone this week 06/16/14 [Last modified: Monday, June 16, 2014 7:17pm]
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