Amazon Plans to Give Free Smartphone to Consumers: [Report]

213 (NASDAQ:AMZN), the world’s largest e-commerce retailer is planning to offer a  free smartphone to consumers, according to report from Amir Efrati and Jessica Lessin, a former reporter & editor at the Wall Street Journal based on information from sources with knowledge about the company’s plan.

Sources said that Amazon might require consumers to sign up for its Amazon Prime customer loyalty program to be able to get the free smartphone even if they opt not to sign for a new wireless plan. Generally, wireless providers offer mobile devices to consumers at a discount price if they sign a two-year contract.

One of the individuals familiar with the issue said that Amazon negotiated with wireless carriers to offer its device, but through its website. Amazon’s plan is still unclear.

According to Effrati and Lessen’s source, Amazon’s plan to offer is smartphone for free is not yet final, and its strategy depends on several factors such as financial arrangements with hardware partners. The person doubted the ability of the online retail giant to offer a free smartphone.

The online retail giant had been developing a smartphone with 3D screen for at least two years now, according to Wall Street Journal. The smartophone is part of its Alphabet Projects, which also include an audio and TV streaming devices to broaden its Kindle brand. The development was delayed because Amazon faced difficulties in finding partners to manufacturer the device since most have existing agreement to exclusively produce Google (NASDAQ:GOOG) approved Android devices preloaded with Google apps.

Amazon’s plan to offer a free smartphone could disrupt the strategies of its rivals such as BlackBerry (NASDAQ:BBRY) (TSE:BB) and Microsoft Corporation (NASDAQ:MSFT) to increase the market share of the BlackBerry 10 and Windows Phone 8 devices, respectively. Microsoft recently acquired the Devices and Services business including the Asha and Lumia smartphone brands of Nokia Corporation (NYSE:NOK).

Apple (NASDAQ:AAPL) is also trying to boost its sales by introducing a cheaper iPhone called iPhone 5C.  The tech giant is expected to reveal the iPhone 5C, and its new flagship iPhone 5S together with other devices on September 10.

The online retailer giant will probably concentrate on generating revenue from mobile advertising and selling apps and digital media from its online store if it finally decides to give away its smartphone for free.