Strategy question
Should Amazon enter the smartphone business?
- Strategy
- Hard
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What this question tests
Strategic judgment on market entry: can you weigh Amazon's actual advantages and the smartphone market's brutal economics before giving a clear recommendation.
How to approach it
- Recall the relevant history, Amazon already tried this with the Fire Phone, which failed, so ground the answer in that context.
- Assess the market: smartphones are a mature, thin margin, hardware heavy business dominated by Apple and Samsung with huge switching costs from existing ecosystems.
- Assess Amazon's advantage: strong in logistics, cloud, and e-commerce, but weak in consumer hardware design and mobile app ecosystem, the exact reasons Fire Phone failed.
- Weigh the opportunity cost, the resources needed to compete here could instead strengthen Alexa devices or Kindle, where Amazon already has real traction.
- Give a clear recommendation, no, do not enter smartphones directly, but continue investing in Alexa enabled hardware as the better vehicle for ecosystem reach.
- State the guardrail, revisit only if Amazon secures a truly differentiated angle, like deep AI assistant integration unavailable elsewhere.
What a strong answer includes
- Grounds the answer in the real, known history of the Fire Phone failure, showing genuine market awareness.
- Gives a clear no with reasoning instead of a noncommittal list of pros and cons.
- Proposes a better alternative use of resources, Alexa hardware, rather than just rejecting the idea outright.
Common mistakes
- Ignoring the Fire Phone's real, well known failure and analyzing this as if it were a blank slate.
- Giving a wishy washy answer with no clear recommendation either way.
Likely follow-up questions
- What would have to change for you to reconsider this recommendation?
- Why did the Fire Phone fail, in your view?
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 4: Discovery and strategy for AI products
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop