Amazon discounts Android phones in exchange for lockscreen ads

Dive Brief:

  • Amazon is offering new Android smartphones at discounted prices for Prime members, supported by personalized offers and advertisements displayed on the device’s lockscreen.
  • The lockscreen promotions include deals and product recommendations, Amazon announced Wednesday, adding that customers can tap their smartphone screen to learn more about an offer or unlock their device to dismiss it.
  • The promotion includes Blu’s new R1 HD, available to Prime members for $49.99 (half off its suggested retail price of $99.99) as well as Motorola’s new fourth-generation Moto G (priced at $149.99, $50.00 off its $199.99 MSRP). Amazon is selling both Android phones unlocked, with no commitment to a wireless carrier contract.

Dive Insight:

Despite previous failings in the market, Amazon obviously still harbors ambitions of leveraging the mobile channel to market products and services to Prime customers. 

The retailer's branded Fire smartphone ranks among Amazon’s most notorious flameouts. Unveiled exactly two years ago this month, the phone featured Amazon’s own Fire operating system and touted shopper-centric features like Firefly, which automatically recognizes text, sounds and objects, then offers options to purchase corresponding items via the Amazon platform.

At launch Fire buyers were offered a year of Amazon Prime service and 1,000 Amazon virtual coins redeemable for Fire applications and games, but the smartphone never caught on with consumers. After a series of price cuts and a $170 million write-down of costs associated with the device, Amazon halted Fire manufacturing last September.

This time it's turning to established smartphone manufacturers Motorola and Blu to reach audiences. Amazon already offers discounted versions of its own Fire tablets and Kindle e-readers supported by lockscreen offers: While the company does not release sales data on any of its devices, it said in a press release that “the vast majority of customers choose the lower-priced option.”

Beyond the lockscreen ads, Amazon is customizing the Blu R1 HD and Moto G to include a branded homescreen widget featuring a personalized selection of daily deals. Both phones also sport a single sign-on experience giving Prime members direct access to Amazon’s Prime Video, Prime Music, Prime Photos and Kindle First content services, along with Amazon Underground, which promises thousands of free apps, games and in-app items.

The question facing consumers is whether a $50 smartphone discount is a fair trade-off for a potential deluge of Amazon ads and pricing alerts. A Deloitte study published in late 2015 states that U.S. consumers look at their smartphones 8 billion times each day in aggregate: 48% of Americans check their phones up to 25 times per day, and 4% check their devices more than 200 times a day. That may be more Amazon in your face than even the most enthusiastic Prime user can tolerate.

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Filed Under: Marketing E-commerce