Amazon is making a big change to the discounted smartphones it sells under its “Prime Exclusives” program—and most customers will be pleased.
Under the program, Amazon sells mid-tier and low-end smartphones from brands like LG and Lenovo’s Motorola at a discount. But in return, Amazon plastered the phones’ lock screens with advertisements and special offers.
Starting Feb. 7, however, the ads and offers will disappear but the discounted prices will remain (Update: web site Liliputing reports a $20 price hike is also on the way, though the phones will still be discounted). And for existing owners of a “Prime Exclusive” phone, Amazon will distribute a software update that removes the ads, as well. Customers will then be able to choose their own wallpaper or photos to decorate the phone screen. The lineup will still include pre-installed Amazon apps like Prime Video and Prime Music, Amazon said.
Amazon said it was making the change to keep up with new developments in unlocking phones like facial recognition and on-screen fingerprint sensors, both of which may make the ads disappear quickly. And the removal may also signal that the ads hadn’t gained much traction.
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Last year, the company said it would be the sole seller of exclusives for some phone models from Nokia-licensee HMD Global, Alcatel, and Motorola, costing $80 to $200 for members of Amazon’s Prime subscription program. A recent check of Amazon’s page shows seven models offered, ranging from an LG G6+ for $500 to a Moto e4 phone for $100— all still with the mandatory lock screen ads. Amazon offers the same LG phone without ads for $652 while an LG Q6 phone is discounted to $180 from $300.
Unlocked phones, which typically can be used on any of the major U.S. carriers, have become an increasingly important category with the death of phones subsidies. Last year, the segment accounted for 12.5% of the U.S. market, or about 30 million phones, with about half purchased online, according to NPD Group. Owners of unlocked phones are less loyal both to their carrier and to their phone brand, NPD said.
Of course while Amazon (AMZN) is appealing to the budget segment, Apple (AAPL) and Samsung, the two largest smartphone makers, have been testing higher prices with the near-$1,000 iPhone X and Galaxy Note 8.
