Explaining the Strategy Behind Amazon's Move into Consumer Devices

Amazon built its business as an online retailer, yet it also designs and sells its own hardware. Explain the strategic reasons Amazon chose to move into the hardware business. ```hint Look past the sale Many Amazon devices are priced low. Ask what Amazon earns, learns or protects after a device reaches a customer's home, and whether that answer changes from one device line to the next. ``` ### Clarifying Questions - Should I cover the consumer devices (e-readers, tablets, streaming sticks, smart speakers, home cameras), or also the custom server chips Amazon builds for its cloud business? - Are you asking about the reasoning behind Amazon's first move into devices, or why it kept widening its hardware lineup afterward? - Should the answer also assess whether the strategy has paid off, including devices that failed? ### What a Strong Answer Covers - Amazon's core businesses and the specific problem each device line addressed for them, rather than one generic reason. - The economics of selling devices at thin margins and earning from later purchases, subscriptions and engagement. - Platform control: reducing dependence on other companies' devices and app stores to reach customers. - The role of devices in Prime, in customer data and in new interfaces such as voice and the smart home. - Limits and counter-evidence, such as failed devices and the cost of running a hardware business, leading to a balanced conclusion. ### Follow-up Questions - Amazon's phone failed while its e-reader and smart speakers sold widely. What explains the difference? - If you were advising Amazon today, which device line would you invest in more, and which would you cut? - How would you judge whether a smart speaker sold near cost is profitable for Amazon?