Amazon plans to change the status quo, could offer Kindle smartphone free

Everybody knows that Amazon wants to make a smartphone, but a new report has suggested the company also wants to make a smartphone that's free for consumers when it launches.

Former Wall Street Journal reporters Jessica E. Lessin and Amir Efrati both reported on Friday that Amazon hopes to sell its own smartphone at no cost despite whether consumers buy it on a carrier contract. The duo cited anonymous sources familiar with the retailer's plans.

Update: Amazon says Lessin's report is incorrect.

It's not clear if Amazon will require a paid subscription to Amazon Prime or something similar for consumers to get their hands on an Amazon-made smartphone, but the sources claimed Amazon would offer its smartphone directly to consumers through its website 

Such a strategy would mirror Amazon's move in regards to the Kindle Fire. The retailer launched its forked-Android tablet at a low cost with the hope of making money through content sales and adverts, and it subsequently sold much better than anyone had expected. Amazon could therefore think a similar strategy is necessary to make a significant impact in the market.

Read: Amazon phone 'confirmed', modified Android OS expected

It's also worth noting that Amazon's strategy would primarily interest US consumers. Carriers in countries like the UK offer many mid- to high-end smartphones free on contract. This is different from the US, where most free smartphones on contract are low-end or outdated. Amazon's anticipated smartphone will likely be a mid-range handset, so the chance to get it free should attract many consumers.

At least that's what Amazon is probably thinking. If Amazon's smartphone doesn't boast all the features and high-end specs of pricier handsets on the market, issuing it free could be the retailer's only option. This is especially true if the smartphone runs a forked version of Android, because it will have plenty of other Android handsets to contend with.