Amazon plans entry into smartphone market with HTC

October 15, 2013 5:15 pm

Amazon plans entry into smartphone market with HTC

By Tim Bradshaw in San Francisco, Sarah Mishkin in Taipei and Barney Jopson in New York

Amazon is working with HTC to develop a range of smartphones as the e-commerce company steps up efforts to compete with Apple and Google, according to people familiar with the project. One of the three devices discussed by the two companies is at an advanced stage of development, according to one person, but another warned that the timeline for launch has been changed before and Amazon may yet decide not to release the device.Rumours that Amazon would enter the smartphone market have been circulating for up to two years. The device is unlikely to launch this year but may launch in 2014 if Amazon decides to proceed with the project.

Amazon did not respond to a request for comment. In response to a recent report on its mobile ambitions, it said that it had “no plans to offer a phone this year”. HTC declined to comment on Amazon, but Ben Ho, its chief of marketing, said the company is “always exploring new opportunities”.

“We have been very focused on building our own brand, but we have also been very open to co-branding and collaborating with carriers and other technology brands,” said Mr Ho.

By tapping HTC to help design the phones, Amazon is acting much like Google, which has partnered with brands such as Asus and LG to develop its own Nexus line of tablets and phones.

Selling smartphones could help Amazon foster greater consumer loyalty as people increasingly shop via phones and tablets. Apple and Google, which now dominate the smartphone market, both have competing stores to sell books and music.

Amazon’s Kindle Fire tablet, which first launched in 2011 and was most recently updated last month, runs a customised version of Google’s mobile operating system, Android.

Kindle devices have been developed at its Seattle headquarters and by its secretive design unit in California, Lab 126, but are made by contract manufacturers. Working with a brand-name device maker such as HTC would be a first for the Seattle-based online retailer.

For HTC, the partnership with Amazon hearkens back to its history as a designer of mobile gadgets for companies such as Palm. The company later emerged as a brand in its own right, but more recently it has struggled with the marketing and retail skills needed to compete against Apple and Samsung for consumer attention. It reported its first ever quarterly operating loss this month.

This is not the first time that HTC has tried to boost its profile and sales by partnering with a better-known internet brand. This year, it brought out the HTC First, the so-called Facebook Phone, but the relatively cheap hardware and deep embedding of the social network in the phone’s software did not prove a big seller.

Nonetheless, analysts and people familiar with HTC say that its partnership with Amazon could be a good strategy, as it allows HTC to focus on its relative strength in product design.