Despite the many denials repeated over the last few years, Amazon might soon enter the low-cost mobile phone market for its Prime customers starting in the United States.
Amazon’s plans, revitalized by Bloomberg in the USA, have caused an immediate stir in the financial community and among observers of the American giant. They are questioning the sustainability of a potential entry of the company into the mobile phone service sector. It’s not an easy challenge. Over the years, the case file has been closed several times by Jeff Bezos himself.
What are the difficulties?
Analysts are quite skeptical. JP Morgan, for example, stated that it is still too early for such a step. Both on this and on the other side of the Atlantic Ocean. In particular, the investment bank’s experts highlight how a potential agreement between Amazon and Dish for a mobile phone service in the United States would encounter a significant obstacle. The latter still does not have a network capable of competing with the main market players, such as AT&T, Verizon, and T-Mobile.
Moreover, in Europe, Amazon has even fewer Prime customers than in the United States. Therefore, its immediately available user base would be too small. The numbers would be unsuitable for creating the economies desired by the company’s leadership. Furthermore, the mobile phone markets of the old Continent are even more competitive than those of the United States. This would leave Amazon even less room to differentiate on its prices.
Notwithstanding the above, it seems that Amazon is already taking the first steps to enter the mobile phone market. In fact, many other analysts have stated that the company has long been intending to enter this area of business.
What analysts say
According to Morgan Stanley, telecom companies would do well to keep an eye on Amazon’s moves. Just think of what happened on June 2nd last year. Bloomberg relaunched the rumor of Amazon’s potential entry into mobile telephony. What happened? AT&T and Verizon lost more than 3%, while Deutsche Telekom dropped over 9%. On the other hand, Dish, rumored to be Amazon’s partner for this sector, gained 16%!
It’s safe to say it will be difficult for Amazon to make a move in Europe in this area before positive steps are successfully taken in the United States. Therefore, the telecom companies of the old Continent can sleep peacefully, at least, for the time being.
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We take this opportunity to point out to our readers interested in entering the Amazon market in the United States of America our guide for European sellers. For sellers also interested in the Ebay marketplace, we suggest reading our article on selling on both eBay and Amazon markets.