Amazon makes exclusive smartphone deal

Dive Brief:

Amazon has become the exclusive sales channel for the Essential "Halo Gray"-colored mobile smartphone, the latest release from start-up phone manufacturer Essential Products, and which also comes loaded with the Alexa app, according to TechCrunch.
The phone was posted as available for pre-order, and Essential also added phones in three new colors for sale on its own website last week, but the Halo Gray model on Amazon is available for at least $50 less than Essential's other phones.
In addition to being a sales channel partner to Essential, Amazon is also an investor in the start-up, having teamed up with China's Tencent to participate in a fund-raising round for Essential last year.

Dive Insight:

It took several months, but this is somewhat to be expected, after Amazon reported last summer that it would be a new investor in Essential Products. Amazon was expected at that time to become a new outside sales channel for Essential, and industry analysts also predicted that Alexa would have a pre-installed presence on Essential's phones.

At the time, this investment was seen as one element of a potential new direction for Amazon's own mobile strategy as it recovered from previous failures in the smartphone space. It remains to be seen how that will play out. Amazon was once reported to be considering re-entry into the smartphone market, but lately has seemed to be more focused on continuing to strengthen Alexa's mobile case. The Essential Halo Gray is a nice addition to the growing variety of devices — Amazon-branded and not — that have become vehicles for the Alexa virtual assistant.

For now, Amazon's sales exclusive for the phone may mean much more to Essential than it does to Amazon. For Amazon, it's just one more Alexa-enabled device being offered for sale. But for Essential, the partnership could signify much broader market reach than it can achieve on its own at a time when the company could apparently use a market boost.

The Halo Gray posting at Amazon came a few days after market research firm IDC said that Essential sold under 90,000 units of its much-hyped phones in 2017, according to The Verge. If that's true, Essential can use all the help it can get, and selling through the e-commerce giant is a good start. It's not clear how much money Amazon invested in Essential, but it certainly doesn't want to be associated with another smartphone that couldn't make the cut.