What an Amazon (AMZN) Phone Means to Investors

As the smartphone market gets more saturated with more companies, it's important for manufacturers to differentiate themselves with the next great smartphone. It appears Amazon (AMZN) is doing just that, and if it's successful, could be a boom for investors.

On Wednesday, Amazon sent out a notice to sign up for an event in Seattle, on June 18, presumably at the company's headquarters. The company also included a video on the sign-up page, with customers demoing the unspecified device. However, if you freeze the video at around 42 seconds, you can see the device, and what looks like to be a phone. Amazon has been rumored to be working on a phone for months, one that would incorporate 3D technology into the screen, something that's hinted at on the sign-up page.

If you sign up to attend the event as a developer, you're asked a couple of questions which indicate that Amazon is working on incorporating gyroscopes, accelerometers, or other device sensors, as well as developing apps for a new type of sensor.

Previous media reports have suggested that Amazon may indeed be working on two phones, a high-end and a low-end phone, which would use a Qualcomm (QCOM) Snapdragon processor, and feature 2GB of RAM. The phone could be 4.7-inches diagonally, and feature 720p HD resolution, lower than the 1080p HD resolution offered on the iPhone 5s, and other offerings from Samsung and HTC.

The phone may also have a total of six cameras, with two in the front and four in the back maintain the 3D effect on the phone, without having to wear 3D glasses.

With Apple (AAPL) and Samsung owning the top-end of the smartphone market, particularly Apple, Amazon has to attack the market differently, and that includes using its devices to continue selling digital content, or physical goods from its website.

Amazon - Photo by Shutterstock

Amazon - Photo by ShutterstockAmazon's media sales, which includes digital content like movies, MP3 music, books and magazines, accounted for 29% of the company's annual net sales, coming in at $21.7 billion, up 9% year over year. It's clear that this is an important source of revenue for Amazon, given it's nearly one-third of the company's revenues, so anything Amazon can do to increase the ecosystem surrounding itself and facilitating these sales, it will do.

This has been the strategy Amazon has used before for its hardware, namely its Kindle e-readers, Kindle Fire tablets, and most recently its Fire TV set-top box, and that's worked with some success. It's difficult to gauge exactly how much success, as Amazon does not release hardware revenue, nor number of units shipped.

Amazon's Prime movie streaming service has been a success, proving a worthy adversary to services like Netflix (NFLX) and Hulu, with a reported 20 million users domestically, a number Amazon has never actually confirmed.

CEO Jeff Bezos has said previously that Amazon's Kindle Fire tablet devices are sold at cost, and the company only wants to make money when customers use the device, not when they purchase them. This seems likely to continue with Amazon's phone, given all the services it could put on there as stock apps, including Amazon Prime, Amazon Instant Video, Amazon Cloud Player, and the Amazon shopping app.

It's unclear at this time who partners Amazon is working with for the phones, whether it's Verizon (VZ), AT&T (T), Sprint (S) and other carriers or when the phone will be released, but it's clear Amazon has grand ambitions for its hardware strategy, which in turn should drive more sales, something investors can certainly smile about.

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

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