Matthew C Klein, Columnist

How Amazon Could Undercut the iPhone

Amazon.com is talking with mobile phone manufacturer HTC about a developing a line of devices to challenge Apple and Google.

October 18, 2013 at 9:06 PM UTC

By Matthew C Klein

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

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Bloomberg News reports that Amazon.com Inc., the Internet retailer, has been talking with HTC Corp., the mobile-device manufacturer, about the possibility of collaborating on developing a line of smartphones. These would be optimized for Amazon Prime customers to download music and videos, as well as shop at Amazon and Zappos. According to the Financial Times, HTC would make at least three distinct handsets , the first of which may be released as early as next year. This is great news for consumers.

For two decades Amazon has ruthlessly undercut its competitors on price without skimping on quality, sacrificing profits to gain market share. (I highly recommend reading the excerpt from Brad Stone's forthcoming book about Amazon that was recently publishedin Bloomberg Businessweek for more details about the strategy.) Investors have rewarded this unusual behavior by giving Amazon a market value of $150 billion.