Sunday, June 22, 2014

Amazon and T-Mobile: Agents of Change

  • After years of speculation, last week Amazon CEO Jeff Bezos announced its Fire mobile phone which 1)integrates its media services (including e-books, Prime Instant Video and Prime Music streaming), 2) provides a new 3-D display and 3) uses Firefly image-recognition which can identify items in a 70 million product database as well as scan phone numbers, web addresses and email addresses on printed material.  Note: because the device is a modified version of Android, customers cannot access the Google Play store.
  • Separately, T-Mobile CEO John Legere announced that 1) its wireless carrier customers would no longer incur data usage charges when using music streaming from PandoraSpotifyiTunes RadioiHeartRadioSlacker,Rhapsody and Samsung's Milk Music (other music services may be added later) and 2) a new program called “Test Drive” would allow potential customers to try out its network with a loan of an Apple iPhone 5SNote:  A probable merger of T-Mobile will Sprint is part of Softbank CEO Masayoshi Son’s efforts to expand its U.S. presence.
  • Regarding Amazon – For years, as Bezos and his team introduced new services and entered new markets, the firm’s profitability has been meager.  However, their efforts have reshaped markets and benefited both consumers and investors. While some critics suggest the Fire is too expensive and gimmicky, it is likely that 1) the functionally of the product will evolve, 2) its integration will the firm’s cloud services will increase and 2) lower priced phones will be introduced.
  • Regarding T-Mobile – Since Legere became CEO in September 2012, initiatives that have delivered positive results include 1) eliminating wireless service contracts, 2)  introducing an early upgrade program, 3) removing international data roaming charges, and 4) covering early termination fees of customers when the move from rival carriers. If he becomes CEO of the merged Sprint/T-Mobile entity, competition among U.S. wireless players will likely increase and consumers should benefit as well

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