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TheStreet Open House

Why Amazon's Smartphone Faces an Uphill Climb

Stocks in this article: AMZN T AAPL BBRY MSFT SSNLF

NEW YORK (TheStreet) - Amazon (AMZN - Get Report) is entering the smartphone market as it reveals its first phone on Wednesday. AT&T (T - Get Report), the data connection provider for Amazon's Kindle, is rumored to be the sole carrier.

The odds of a successful Amazon smartphone are long. While AT&T may benefit from an exclusive contract with Amazon, that won't help Amazon reach a critical mass of users. Apple's (AAPL - Get Report) iPhone once was exclusively sold by AT&T, but when Apple began to sell the phone through other carriers, the company's revenue and profit rose, and its stock soared.

For Amazon, BlackBerry's (BBRY) Z10 smartphone offers a lesson. The Z10 is an excellent phone, and after many long, painful delays for BlackBerry shareholders, it was released in March 2013. But you don't know it's a great phone because you probably haven't seen one, because so few people bought them.

The Z10 was too little, too late. Amazon's smartphone entry will play out similarly. Lots of fanfare and media attention for about a month, followed by essentially radio silence. The phone idea will most likely go down as one of Jeff Bezos' few, albeit biggest, mistakes.

For one, Android by any other name is still an Android. Amazon's Kindle Fire uses a forked version of Android as its operating system. If the operating system ventures too far off the path, it risks failure to run future popular apps.

If the phone doesn't venture too far from the standard Android operating system, then it won't likely be much different than every other Android phone, other than maybe a few temporary novel bells and whistles. 

The Amazon smartphone may have enough unique characteristics to be the cool kid for about a month, but so was the Z10.

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