AT&T Reported To Be Exclusive Carrier Of Amazon 3D Smartphone

Amazon’s AMZN Wednesday launch of a 3D capable smartphone will include news that AT&T T will be the exclusive carrier for the device, according to sources who spoke with The Wall Street Journal.

Amazon and AT&T have already forged a strong partnership since the telecom also provides wireless service for Kindle tables and e-readers. At a time when competition among wireless carriers remained fierce, news of the agreement could help AT&T gain new customers, provided enough people find the Amazon device attractive.

For both companies the reported new smartphone represents a risk. Amazon shares were down 18 percent so far this year, mostly the result of investor concern about Amazon’s thin profit margins and the company’s history of dumping enormous amounts of revenue back into operations and hardware.

AT&T struggles to compete with rivals Comcast CMCSA and Time Warner Cable TWC on the video and broadband front and Verizon VZ and others in cellular.

Related: Samsung Galaxy Tab S To Debut On AT&T - Analyst Blog

As the company has continued moving away from feature phones to smartphones and streaming, a potential exclusive deal with Amazon could provide a real boost to those efforts.

All this, of course, would depend on broad consumer interest in another entry in the crowded smartphone space.

As The Wall Street Journal article pointed out, Amazon may be handicapping itself with mobile app developers, and consumers, if the new smartphone uses, as expected, a special Kindle-like version of Google’s GOOG GOOGL Android mobile OS that doesn’t provide access to the Google Play Store and its more than one million apps.

In addition, the newspaper said, some app developers who have seen nonproduction versions of the new handset reported some concern about how they could even use the 3D eye-tracking software in their apps.

The most obvious use of a device that could create 3D images would be advertising and product sales, something at the center of Amazon’s structure. Another potential use of 3D would be gaming.

Other uses for the new smartphone, based on specifications reported by Techradar, include optical character recognition, which would allow a user to take a picture of, for example, a business card and merge the contents with contacts.

In addition, much has been reported about the ability of the device to utilize gestures and tilting to perform a variety of tasks, making queries to sites like IMDB or Yelp YELP easier and less involved.

Ultimately, however, since Amazon would likely view its new smartphone as more sales tool than anything else, the advantage for AT&T would depend on how successful Amazon became at turning smartphone owners into Amazon shoppers.

At the time of this writing, Jim Probasco had no position in any mentioned securities.