Amazon Will be a Mobile Service Provider in Japan

Amazon is set to enter the Japanese mobile service provider market, selling prepaid 500 MByte SIM cards for a flat rate of about $25, Nikkei reports.

The cards will be usable on NTT Docomo’s LTE network. The news comes as Facebook is said to be considering building its own smart phone.

Facebook also is rumored to be looking at its own browser as well.

To be sure, the move is probably more aimed at helping Amazon sell  mobile content than anything else.

But that alone shows that a new segment could open up in the mobile business, namely lots more entry by application providers into the mobile virtual network operator business, bur as specialized content providers, not traditional voice and data access providers.

Microsoft's recent investment in the new company that will own the Nook tablet and content business illustrates a couple of important strategic shifts now happening in the mobile device and application markets. 

The biggest shift is the growing importance content, advertising and commerce operations are assuming for device and application suppliers.

Some believe the "Four Horsemen" of the Internet include Facebook, Apple, Google and Amazon. Others might say the list actually is "Five Horsemen" and include Microsoft. Either way, the notion is that  handful of firms have the ability, at least in principle, to create and own a complete and walled-off ecosystem in which consumers use a single company’s hardware, operating system and storefront to search online, buy apps and purchase digital media and  physical products.

If that proves to be true then a couple of predictions are easy to make. Facebook and Amazon will produce their own smart phones. Facebook might also have to produce a tablet. Apple will have to create a mobile payment service, as will Microsoft.

Google and Facebook will have to get more share of the e-commerce and mobile commerce transactions, and all will deepen the activities they now already support around mobile advertising, promotion and loyalty.

The rumor surfaced that Facebook is getting closer to releasing its own branded smart phone, an obvious attempt at owning a stack component (hardware) that’s currently missing from its line-up, is part of that trend.

“A smartphone would be a logical next step for Amazon,” ABI Research Analyst Aapo Markkanen says.

Traditionally, mobile phones simply were devices carriers had to provide to sell voice and messaging services.

These days, matters are more complex. In addition to communications, hot consumer devices frequently are used for content consumption. That means smart phones are more important to application providers as platforms for selling content and advertising.

Everyone expects a mobile device to handle voice and texting. Beyond that, more users expect the ability to consume content and conduct transactions. That changes the strategic importance of being a device manufacturer.

For mobile service providers, phones have been a sort of prop to produce revenue indirectly, in the form of service subscriptions. But that also now is increasingly true for application providers.

For Apple, which merchandises all sorts of content to sell devices, the tight bundling of content and commerce is a major reason it can sell so many devices. That also is true for some other mobile device manufacturers. But not for all.

For Google and Amazon, devices are a way to sell more advertising, content and merchandise. Microsoft has a slightly different take, as it always has preferred to sell operating systems to partners who make phones. But Microsoft has to succeed in mobile operating systems to profit from the device ecosystem that supports the advertising, commerce and content businesses.

Such thinking is not terribly new. Consumer electronics manufacturers have for decades understood that content was important for the devices business. Sony is probably the best example of that. Apple arguably was the first consumer devices firm to really achieve that integration, with its iPod and iTunes.

These days, gaining the ability to lock consumer into a particular content ecosystem is the reason producing devices matters.

There has been lots of speculation about whether Apple, for example, might want to become a virtual mobile service provider as well. It is getting harder to ignore the speculation.