Amazon Is Taking a Different Approach With Its Next Smartphone

January 25, 2016, 7:04 PM UTC
Amazon CEO Bezos Introduces Smartphone to Take on Apple, Samsung
Bloomberg Photo Service 'Best of the Week': Jeff Bezos, chief executive officer of Inc., unveils the Fire Phone during an event at Fremont Studios in Seattle, Washington, U.S., on Wednesday, June 18, 2014. Inc. jumped into the crowded smartphone market with its own handset called Fire Phone, ramping up competition with Apple Inc. and Samsung Electronics Co. Photographer: Mike Kane/Bloomberg via Getty Images
Photograph by Mike Kane — Bloomberg via Getty Images

Amazon wants a second shot at creating a hit smartphone, accord to a report by The Information on Monday.

Instead of focusing on redesigning the hardware, the e-commerce giant is approaching Android smart phone manufacturers to put retailing apps on its smartphones at a “factory” level, the report said. Translation: Instead of simply pre-installing some of Amazon’s (AMZN) mobile applications on a device, Amazon wants to have its core services—such as its Firefly product scanning technology—integrated directly into the device’s operating system.

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Potentially, shoppers would be able to use the phone’s camera to scan products on store shelves to automatically add them to their Amazon shopping cart. It would help them avoid having to open the Amazon app to browse for products.

Another plausible scenario would see Amazon’s voice-assistant Alexa, currently restricted to the Amazon Echo smart speaker, built directly into a smartphone. Using Alexa, users can request sports scores, place orders through Amazon, listen to current news, and control smart home products like lights and thermostats.

Amazon’s first and only smartphone, which the company called Fire Phone, largely flopped after its release in June 2014. It was priced too high, suffered from performance issues, and was limited to AT&T (T) customers. Eventually, the company had to take a $83 million charge in late 2014 related to surplus inventory.

For more read Fortune’s review of Amazon’s Fire phone

Amazon’s mobile ambitions center on its Prime free two-day shipping service that costs $99 annually. That service also includes access to the company’s Instant video catalog, free online photo storage, and Prime Music library.

Amazon provided each Fire Phone user with one year of Prime membership for free, in an effort to introduce new Amazon users to the service and increase shopping through Amazon’s online store.

A partnership with a hardware manufacturer would lessen the financial risk on Amazon’s part, while relying on a company with experience in producing smartphones for more of the hardware design. One such possible partner is HTC, which, in the past, has shown willingness to build smartphones with heavily customized software designed by a partner.

For more on Amazon’s Echo watch our video.

For example, HTC and Facebook (FB) teamed up on the HTC First in 2013. The First consisted of HTC’s hardware powered by a customized version of Android designed by Facebook. But just as the Fire phone failed to gain traction, so did the First.

The Information notes, however, that any such partnership could benefit from priority placement on Amazon’s online store, creating a highly visible product. But even in its phone software, Amazon’s strategies are suspect.

With the Fire phone, Amazon customized the core Android operating system and stripped the device of all apps from rival Google. It’s a similar strategy to what Amazon does with its Fire line of tablets as a way to limit Google’s threat and avoid paying it any revenue. But phone buyers aren’t necessary as bothered by Google’s apps. In fact, many may be annoyed by the lack of Google software.

Amazon has yet to respond to Fortune’s request for comment.


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