Amazon smart phone expected to be exclusive to AT&T

Amazon's highly-anticipated smart phone is expected to be exclusive to AT&T. Will this arrangement do for Amazon's smart phone what the wireless carrier's exclusive deal with Apple did for the iPhone in 2007?

Amazon's upcoming smart phone will be exclusive to AT&T, according to the Wall Street Journal, citing "people familiar with the plans." The much-anticipated phone is expected to be unveiled Wednesday by Amazon chief executive Jeff Bezos during an event at company headquarters in Seattle.

This could be a big coup for AT&T. If the phone is exclusive to one carrier, it raises questions about the terms of the deal that Amazon struck with the wireless carrier. This would extend the wireless carrier's standing relationship with Amazon; AT&T currently provides wireless service to Amazon Kindle e-readers and Kindle Fire tablet devices. 

The arrangement serves as a reminder for the exclusive deal AT&T struck with Apple in 2007, making it the only wireless carrier for the iPhone for more than three years and solidifying the era of the smart phone. Since then, while AT&T has struggled to keep pace with rival Verizon, the network doubled its traffic each year through 2013, according to Forbes. 

More significantly, this deal points to the larger question on the minds of many in the lead-up to Amazon's big reveal: How will the online retail giant stand out in a market that is already highly saturated? Apple and Samsung dominate 65 percent of the market share, with Android devices alone comprising more than 80 percent of the market share. It is unclear at this point what operating system an Amazon smart phone would use, though an article in Bloomberg earlier this month speculated that it may run on Android, Google's mobile operating system. 

Regardless of how well the new device will perform, Amazon has been hyping this launch event for weeks. A recent photo of an undisclosed Amazon device and a YouTube video showing people enthusiastically opening something just out of reach of the camera's view demonstrate the extent to which Amazon wants you to know that it has, well, something pretty cool on the horizon. 

Much of this speculation has centered on the possibility of a 3-D feature that would not require special glasses. 

Should Amazon gain traction in the competitive smart phone market, however, it would have the advantage of being able to sell to customers "without a middleman," as The New York Times notes. From its Kindle e-books to services provided to Amazon Prime members, such as the music-streaming service launched last week, it seems Mr. Bezos' vision of creating the "Everything Store" could be coming to fruition right in the pockets of consumers.  

“If consumers adopt Amazon’s phones — and that’s a big ‘if,’ considering they love their iPhones and love their Android devices — it can then consolidate e-readers into smartphones, just like cameras and music players have been consolidated,” Rebecca Lieb, an analyst with the Altimeter Group, tells The Times. 

But critics worry about the company's increasing encroachment into all aspects of the media industry. Amazon currently finds itself under fire for strong-arm tactics used against media suppliers, notably evidenced in Amazon's public battle with the publisher Hachette Book Group. In recent weeks the publisher has seen Amazon raise prices on some of its titles and delay shipments by weeks, reportedly in an effort to receive greater payments from publishers.