Amazon Reportedly Plotting to Offer Free Smartphones

While the move would certainly be unprecedented, Amazon is reportedly mulling over the idea of offering a smartphone to consumers at no cost.

According to former Wall Street Journal tech journalists Amir Efrati and Jessica Lessin, the Web-titan-turned-tech-giant is considering offering its long-planned smartphone for free, citing sources familiar with Amazon’s effort.

Considering Amazon's proven success with the Kindle, a jump into the smartphone arena has long been reported. But offering a mobile device for nothing upfront without the typical multi-year contract with a service provider (which subsidizes the cost of discounted phones, such as the iPhone or Samsung Galaxy) is hardly the norm.

As Efrati and Lessin point out, Amazon could likely recoup some costs by offering it free to people who pay $79 a year for its Amazon Prime service, which includes free shipping and access to the company's video streaming service. Ads and other alternative methods might also be another option, but even that would seem to come short of the full cost of a smartphone.

Ultimately, such a move could spell problems for Apple, which has already been hit pretty hard in the last year by slowing revenue and stock prices, in addition to fierce competition from Samsung's Galaxy devices. The report also comes ahead of an expected iPhone announcement next week, in which the company is widely expected to reveal multiple updates to its iPhone (and possibly iPad) lineup.

This wouldn't be the first time Amazon offered a steep (and seemingly unreasonable) discount for the sake of making a dent in Apple's share of the digital/tech pie. The company has practically given away MP3s and albums in the past, and many experts believe the Kindle's pocketbook-friendly pricing has been a thorn in Apple's side since the product's debut.