Amazon, InPhonic Team Up to Offer Cell Phones, Service Plans

Internet giant Amazon.com is to partner with InPhonic, the company that operates the WireFly Web store, in an attempt to improve its cell phone and cell service plan business, The Wall Street Journal reports.

Seattle-based Amazon is no newcomer to the cell market; however, due to a number of rather large service gaps, the business has not picked up, and it’s not a focus on the company’s e-commerce site, according to The Journal. Those gaps include the fact that Amazon cannot activate phones it sells; it does not offer family service plans; and once customers purchase phones from the website, they’re on their own in locating local carriers for support functions, The Journal reports. The partnership is meant to fill in those gaps, and bolster Amazon’s market share by associating it with WireFly, which already has a strong Internet presence.

Roger Entner, an analyst with research firm Ovum, told The Journal, “It’s basically an admission that Amazon can sell books really well over the Internet, but they can’t sell phones very well.”

Under the deal, the WireFly site will become part of Amazon.com during the third quarter of this year, according to The Journal. Amazon will receive payment from InPhonic based on advertising and the number of phones activated via the partnership, The Journal reports. The first year’s payment could be between $4 million and $5 million, and depending on the success of the partnership, future payments could skyrocket, according to The Journal.

David Steinberg, InPhonic’s chief executive, told The Journal, “Amazon is obviously our biggest competitor. For us, it’s a seismic shift.”

InPhonic currently holds similar partnerships with other Web bigwigs such as America Online, Yahoo and Microsoft, The Journal reports.

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