This is a news note from Business Insider Intelligence, a new research and analysis service focused on mobile computing and the Internet.

Amazon is going to sell prepaid wireless service in Japan, Nikkei reports (via The Verge).

It is entering the mobile virtual network operator (MVNO) market there.

This looks like an experiment that could presage an Amazon phone, which has been rumored since Amazon forked its own version of Android to create a tablet.

Here’s why:

For Amazon to make a credible play for the phone market, it needs to stand apart from the incumbents in some important way.

Amazon can make a strong foray into the smartphone market with the following strategy: become an MVNO, charge lower prices, give away the smartphones, and make money on its software and media ecosystem.

Mobile phones that offer these and more general computing capabilities are referred to as smartphones.

 
Business Insider IntelligenceAnd on a smartphone, there are endless ways for Amazon to make money:

From media sales (books and music)

From software sales: not only from sales of third party apps (and game virtual goods), but also by preinstalling phones with copycat versions of popular phone games (perhaps by acquiring a good mobile games studio) and reaping the whole reward of virtual goods and games

From ads: Amazon is quietly becoming a formidable force in mobile advertising thanks to the strength of its data and Kindle ecosystem

From commerce, of course.

The key thing to understand is that Amazon’s mobile platform is the most “locked down” of the big mobile platforms: Amazon decides what apps and ads go on each device.

So unlike Apple, which is content to make money on hardware sales, and Google, which is content to not make (much) money from Android, Amazon can grab most of the value from its ecosystem, and thus potentially make it a profitable proposition to subsidize both the handset and the telecom service.

 
Here Is Our Latest Report On The Kindle Ecosystem →
A Look At Amazon’s Strengths In Online Advertising →
Our Primer On Kindle Economics →.

Sean Brierley is a business journalist based in Hobart, Australia. Sean has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Sean spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.