Amazon Opens Wireless Phone Shop

Amazon.com (Nasdaq: AMZN) added wireless phones and services to its expanding roster of products Tuesday evening.

The Seattle, Washington-based e-tail giant said it will offer plans from severalleading U.S. wireless companies, including AT&T, Sprint PCS and VoiceStream,and such phone makers as Nokia and Samsung.

According to Amazon founder and chief executive officer Jeff Bezos,some of the phones for sale on the site can be shipped ready-to-use, with the battery charged and the calling plan activated.

Cellular phones have been the most requested items that Amazon did not carry at its electronics store, Bezos added.

Holiday Discounts

The shop features more than 1,000 phone accessories, as well as Web- and MP3-enabled phones. Registered Amazon customers are offered calling plans tailored to their region, as well as the opportunity to compare rate plans side-by-side and receive advice on what plan best suits them by answering five questions on their phone use.

Although Amazon executives say they anticipate the wireless offerings to provide long-range dividends rather than a burst of immediate sales, the company is trying to jump-start the shop by offering discounts of up to US$50 on certain phone and accessory purchases made before Christmas.

Third-Party Distributor

Rather than attempt to handle the process of activating and distributing phones itself, Amazon has signed CellStar Corp. (Nasdaq: CSLT) to handle the logistics of sales. CellStar becomes the first third-party distributor used in Amazon’s retail shops.

Amazon’s cell phone partners in the deal, several of which have their own Web presence already, stressed the convenience of buying phones and calling plans online as well as the e-tailer’s 25 million existing customers.

“This agreement enables our customers to shop from their home or office when it’s most convenient for them,” Sprint PCS chief operating officer Charles Levine said.

Rapid Growth in Cell Use

Levine cited statistics from the Cellular Telecommunications and Internet Association, showing that more than 45,000 people sign up for wireless service every day in the United States, where there are already 100 million cell phone users.

Amazon said it is in negotiations to add plans from several other national and regional wireless carriers, including Verizon and Nextel. However, Amazon can already offer access to 90 percent of the U.S. population, the company said.

Stock Faltering

The news of the new launch came as Amazon was suffering heavy losses on the stock market Tuesday, after two analysts issued downcast reports on the company’s outlook.

Amazon shares, down more than 10 percent on the day, helped drive the Nasdaq down to its lowest level in more than a year. The drop came after the analysts said the early numbers on Amazon’s fourth quarter do not make it clear whether the company is on track to become profitable.

Amazon opened trading Wednesday morning down 9/32 at 24 3/4.

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