Rumor: Amazon To Buy Texas Instruments' Mobile Chip Arm?

The rumor of the day is that Amazon is buying Texas Instruments' mobile chip arm. By a show of hands, how many people think this is a bad idea? Good idea?

Amazon.Com Inc is in advanced talks to buy the supplier of chips for its Kindle tablet computer, Israeli financial newspaper Calcalist reported on Monday, in what could mark a step in the company's ambitions in the smartphone sector.

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I would classify this as bad in the short term.

Potentially good in the long term.

Jeff Bezos is not stupid, period. But this call might show him turning the corner and driving to derpville real fast.

Sure they'll be able to absorb the cost differential and possibly expand the abilities in the Kindle. But in reality, you can only pack so much value for a $ in most cases.

Amazon smashed the doors off the hinges with the original Kindle. But as you can see, Kindle HD is not getting the same attention, Google's Nexus tablet is good competition at that price point, and a lot of Google fans are going to buy that one just the same way Apple fans buy their products. Because they are told to, and most people are told what to buy, they don't decide themselves.

With amazon quantities this can be actually a pretty good idea.
They can get exactly what they want (moderate performace and a mix of needed hardware) at a very low price point
TI of course sells the soc division which they are fed up with.
Looks like a win/win to me

I think this is a big win for Amazon if they want to establish themselves as more of an independent player in the Smartphone/Tablet space ... if they own their own chip design (like Apple) they can start optimizing the apps in their competing store for that chip to make their tablets more competitive than the othe other Android offerings (which have so far faltered pretty badly) ... the one risk for them would be MS if they can make the surface and Win 8 tablets successful ... there might not be enough room in the market for iOS, Win 8, Google Android, and Amazon Android

stiltner said:

I would classify this as bad in the short term.

Potentially good in the long term.

Jeff Bezos is not stupid, period. But this call might show him turning the corner and driving to derpville real fast.

Sure they'll be able to absorb the cost differential and possibly expand the abilities in the Kindle. But in reality, you can only pack so much value for a $ in most cases.

Amazon smashed the doors off the hinges with the original Kindle. But as you can see, Kindle HD is not getting the same attention, Google's Nexus tablet is good competition at that price point, and a lot of Google fans are going to buy that one just the same way Apple fans buy their products. Because they are told to, and most people are told what to buy, they don't decide themselves.

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Amazon is in the business of selling content, not hardware. Unlike Apple, they do not need to make a profit on their hardware directly, in fact, they often sell the Kindle models at a loss with the expectation that the lost revenue will be made up by content purchases. To Amazon, the hardware is simply a means to an end by which people can purchase content from them.

damicatz said:

Amazon is in the business of selling content, not hardware. Unlike Apple, they do not need to make a profit on their hardware directly, in fact, they often sell the Kindle models at a loss with the expectation that the lost revenue will be made up by content purchases. To Amazon, the hardware is simply a means to an end by which people can purchase content from them.

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This is why Amazon makes good money & still manages to be customer-centric.

I would of thought Lab 126 already does this.

I guess it all boils down to selling price. But in general I think this is a bad idea. I mean, let's say this is about milk not CPU's. If Amazon was the primary reseller of milk, hence the dairy farms best customer, would it make sense to just buy the farm? Once done the real costs start to pop up... feeding, housing, caring for the cows, the milking machinery etc etc. Does anyone at Amazon really know anything about milk? What does Bezos know about CPU design and manufacturing? What about fabrication plant upkeep, employees, engineers etc? Also, would the purchase include all the R&D necessary to evolve and grow the chips for the future as required? We're not talking about socket wrenches here, CPU designs are constantly advancing and changing.

I say it's a bad idea. Focusing soley on the cost per chip doesn't reveal the whole picture.

Good

TI still owns rights and produces many 'chips', not Amazon exclusive either.

Personally, I'm a bit worried about Amazon overall. They have made some not-so-consumer-friendly changes over the last few months, particularly for Prime members.