Amazon Eyeing Sprint’s Boost Mobile—A Plan to Get Into the Mobile Business?
Amazon is yet again on the move after evolving from a bookseller to becoming the biggest on-line retailer in the world. Having already made a name for itself on content streaming as well as cloud computing, the tech giant is inching closer to expanding its footprint into the wireless business. Reports indicate that the company is closing in on the acquisition of prepaid cellphone wireless service provider, Boost Mobile.
The possible reasoning behind buying Boost
While the acquisition will help kick-start Amazon prospects in the wireless business, it could also help Sprint and T Mobile achieve regulatory approval for their proposed merger. Reports indicate that the e-commerce giant is open to buying wireless spectrum that the two wireless company will have to offload, to secure regulatory approval.
Even though it is not yet clear why the retailer would be open to buying Boost Mobile, its recent moves could as well provide some hints on the company’s next move. Amazon is already offering phone calls experience through its smart-speaker Echo. The acquisition of Boost Mobile would thus go a long way in strengthening its prospects on this front, in addition to providing an avenue for acquiring some spectrum.
The prospects of using T-Mobile’s wireless network for a minimum of six years with the acquisition of Boost Mobile is another synergy that boards well with Amazon. T-Mobile and Sprint are open to the idea of divesting Boost Mobile as a way of reducing their market share in the prepaid wireless segment.
A spinoff of Boost Mobile could help the two wireless companies gain regulatory as part of the proposed $26 billion merger. Amazon fits the bill as an ideal buyer as the Justice Department is likely to prefer a buyer that would preserve competition in the wireless sector that is undergoing consolidation.
Amazon has grown over the years to become one of the big four technology companies in the world, thanks to big bets in diverse sectors. Its entry into the wireless sector should result in revamped competition given the amount of financial muscle it boasts.
Boost Mobile would be an interesting addition to Amazon as its boasts of 7 million to 8 million customers. The transactions could cost the e-commerce giant $4.5 billion should Sprint and T-Mobile decide to include wireless spectrum into the deal.
In addition to using Boost Media to provide phone services on the Echo Speakers, there is also the prospect of Amazon leveraging the company’ assets to pilot delivery drones and driverless vehicles. While Amazon does lease undersea cables and long haul facilities, the prospect of operating a full-coverage network is highly appealing.
With Boost Media network, the company should be able to launch and manage delivery drones to support its delivery services. The fact that the sector is only a few years away from experiencing the use of driverless cars would also present yet another unique opportunity.
Will Amazon have a second go at the mobile industry?
The acquisition of Boost Mobile has however, caught many people by surprise. The company’s ill-fated Fire Phone business underscores a dark past for a company that has ultimately been successful in everything it has ventured into. The company was forced to exit the smartphone business altogether after crumbling amidst stiff competition from the iPhones and Samsung’s of this world.
A lack of a mobile device has essentially made it difficult for the company to take on the likes of Google and Apple when it comes to powering smart devices. However, the need to power smart homes as well as cars with a reliable network could as well have reinvigorated the company’s resolve for another stab on the phone business.
Amazon has already sold more than 100 million devices featuring its smart assistant Alexa. However, a lack of a successful mobile phone business has made it difficult for the company to command a substantial amount of market share as most of the Alexa powered devices are mostly used at homes. Currently, more than 3.2 billion phones are running on Android operating system while Apple has more than 900 million iPhones in the market. As it, stands Apple and Google pose the biggest competition to Amazon’s echo business.
Taking Alexa Global
With the help of Boost Mobile network, Amazon stands a better chance to lure customers to its Alexa digital assistant with low priced devices as well as plans. The idea is to get the smart assistant into many devices as possible to fend off competition from Siri as well as Google assistant.
Boost Mobile has made a name for itself on offering pay-as-you-go plans with long-term plans. While it does not own the wireless infrastructure over which it provides its services, it has been able to offer plans that appeal to low-income consumers.
The acquisition of Boost will allow Amazon to price its phones plans low as possible in a bid to drive Prime memberships. The company would also stand a better chance to offer mobile phones, where Alexa is the flagship smart assistant.
There is already talk that tech giant could use the opportunity to make another stab on smartphones production. There is also the possibility of the company signing deals with phone manufacturers to set Alexa as the default digital assistant on their devices.
Boost Mobile could also pave the way for Amazon to start offering a new breed of Alexa-enabled devices. With wireless connectivity capability, devices may no longer have to connect to Wi-Fi networks to deliver Alexa’s services with the new model. Such development could lead to Alexa powered headphones that people can use to respond to voice queries without necessarily launching a mobile app.
Regulatory Approval Concern
While Amazon entry into the wireless sector would give the sector a much-needed boost in terms of competition, there are no guarantees. Regulators blocking the proposed acquisition of Boost Media is very much possible.
Following a recent anti-trust standoff, Amazon faces the risk of heightened regulatory scrutiny on any merger, a development that could stall the Boost Mobile acquisition. The-commerce giant failing to acquire Boost Mobile could spell trouble for Sprint and T-Mobile as their proposed merger depends on the divestiture of such assets.