Amazon took a weird path to becoming one of the major mobile device makers. They started out making eBook readers, then evolved that line to include Android tablets.
Those tablets are heavily subsidized by Amazon, and strongly direct users away from Google's services and toward competing services by Amazon.
I've been predicting an Amazon phone for quite a while, and my believe is that they intend to give away free phones to Amazon Prime members, or give away free Amazon Prime memberships to Kindle Phone buyers.
In other words, I believe Amazon intends to make the biggest play for the biggest subsidy. And why not? They can make it up later with all the extra stuff they can sell you through the phone.
The reason is that an Amazon Kindle phone would be the Mother of All "showrooming" appliances.
"Showrooming" is when you find something in a physical, brick-and-mortar store. But instead of grabbing it and paying for it at the in-store register, you use your mobile phone to buy it online as you're standing there in the store.
An Amazon Kindle phone could be optimized for barcode reading, and also for product identification through the phone's camera.
Amazon already has an app that does this beautifully, but hardly anyone uses it.
By giving away the phone with a Prime membership, users could just walk through the stores scanning products on the shelves, and have them shipped with next-day delivery with a single tap of a button.
Advertising has always been based on attention. And what are people paying attention to these days? Their phones.
That's why every company wants to be in control of what people see when they turn their phones on, and direct what, where and how they do what they do when they use their phones.
The phone also gives location and can monitor the user's context in real-time for super-relevant advertising.
For all these reasons, Facebook, Google and Amazon would all like to re-invent the phone experience to put their services front and center, and gain access to user contextual data.
There's big money to be made, and I think these companies are willing to subsidize the hardware to make that money.
This is the year that the smartphone industry gets weird, as many of the major companies start wrestling for control over your smartphone.