Is Amazon Teaming Up with HTC? - Analyst Blog


Reportedly, Amazon ( AMZN ) has decided to team up with phone maker HTC to develop smartphones. It is believed that Amazon would develop a low-cost smartphone as well as a costly device, aimed at different sections of consumers.

Since Amazon makes its own hardware for its Kindle e-readers and tablets, it could have done the same for its smartphone too. But Amazon's collaboration makes sense, given the fact that selling a smartphone is slightly trickier than selling a tablet. It usually requires a global distribution network and carrier partnerships to be successful. While Amazon has a very successful online store, it lacks this distribution network and this is where HTC could fill the gap.

HTC was one of the leading Android phone makers in the world at one time but is now dwarfed by Samsung. Its attempt to partner with Facebook to launch a smartphone was a dismal failure. Given Amazon's brand name, its popular market place, Prime subscriptions and previous success with tablets this partnership with Amazon should be more of a success.

Amazon has already developed an operating system for the Kindle Fire, which could be used on smartphones. Also, unlike Facebook, Amazon is into the business of selling stuff and therefore can sell its smartphones on its own website.

Amazon has gone on to become a veritable consumer electronics giant in addition to being an Internet retailer. The company recently refreshed its Kindle Fire tablets, but other models are expected in the next few months. But Amazon might not stop there. If the rumors are to be believed, the company has many more devices in the works, including a smartphone, an audio streaming device, and an Apple ( AAPL ) TV competitor.

Amazon's hardware competes with both Apple's and Google 's ( GOOG ), although competition with Google is fiercer, since Amazon has adopted Google's Android operating system, but not Google Play. Further, Google is entering its core market with product search ads and Google Shopping.

Currently, Amazon has a Zacks Rank #3 (Hold). Geeknet Inc ( GKNT ) with a Zacks Rank # 2 (Buy) is a more attractive investment this season.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , AMZN , GKNT , GOOG

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