Amazon’s Free Smartphone: Bold or Bust?


News of Amazon’s (NASDAQ:AMZN) free, contract-less smartphone sent ripples through the technology world Friday after two former Wall Street Journal reporters broke the story, but while the concept seems novel, a Forbes report by Mark Rogowsky analyzing the economics of the phone — should it be made available — said the move itself is “pretty irrelevant.”

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Rogowsky’s argument against the phone’s success is threefold, starting with the current system in place between mobile carriers and phone makers.

Carriers, he says, literally pay hundreds more to buy a phone from manufacturers than customers do to get a phone from a company like AT&T (NYSE:T) or Verizon Wireless (NYSE:VZ), and the gap is even more prominent at the high end of the smartphone retail market. The cost of parts in these phones is incidental — the “significant gap between what we pay and what the carrier pays has existed since the dawn of the cellular era,” Rogowsky writes.