Strategy question
Should Amazon launch a smartphone?
- Amazon
- Strategy
- Hard
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What this question tests
Strategic judgment on whether to enter a mature, capital-intensive hardware category, weighing past failure and current advantage.
How to approach it
- Acknowledge history: Amazon previously tried and discontinued the Fire Phone, a relevant data point for this decision.
- Assess the current market: smartphones are a saturated, high-R&D-cost category dominated by Apple and Android OEMs with strong brand loyalty.
- Assess Amazon's actual advantage: retail, cloud infrastructure, and Alexa voice ecosystem, none of which strongly require owning a smartphone.
- Weigh the strategic case for entry: deeper first-party device control for commerce and Alexa integration versus the very high cost and past failure risk.
- Weigh the case against: better ROI likely exists in doubling down on Alexa-enabled devices and retail infrastructure than fighting for smartphone share.
- Recommend no, with a specific alternative: continue investing in Echo and Alexa ecosystem devices instead of re-entering smartphones.
What a strong answer includes
- Explicitly references the real, well known Fire Phone failure (common knowledge) as directly relevant precedent, not ignoring history.
- Grounds the recommendation in Amazon's actual strengths, retail and Alexa, rather than assuming any company can win any category.
- Gives a clear no with a specific alternative investment path, not just a flat rejection with nothing else.
Common mistakes
- Recommending yes with no acknowledgment of the prior failed attempt.
- No tie to Amazon's actual competitive advantages or lack thereof in hardware.
- Vague answer with no clear recommendation either way.
Likely follow-up questions
- What would have to change in the market for this to become a good bet?
- How does the Fire Phone failure inform what Amazon should do differently this time?
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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