Risks May Outeight Rewards For Amazon's Phone, According To Baird

In a report published Friday, Baird analyst Colin Sebastian noted that risks may outweigh rewards for Amazon.com's AMZN phone. Sebastian remarked that Amazon's phone could add “margin pressure and significant competitive headwinds.” He added that the cost of entry and carrier complexity are likely significant. With the company's development of Kindle Readers to the tablet-styled Kindle Fire, the analyst remarked “tablets are a natural fit for AMZN's platform.” Sebastian continued, “smartphones require specialized native apps that would be expensive for the company to replicate. Baird noted that Apple AAPL and Google GOOG each offer more than one million apps. The analyst shared concern over the more than 200,000 apps Amazon offer, questioning if this would be “adequate” for a smartphone. Further, Amazon would need “key” first party apps by Google. Colin Sebastian concluded that a “low-cost Amazon-branded Android phone may be best chance to build meaningful share.” Baird reiterated an Outperform rating on Amazon.com with a $410.00 price target.