Amazon rumoured to be working on smartphone

An analyst claims that Amazon is working on a new smartphone handset with Apple hardware producer Foxconn.

This announcement was made as part of an equities report by financial services company Citigroup. It claims that Amazon's fated handset would likely show up some time in Q4 2012.

Analysts Mark Mahaney and Kevin Chang speculate that they'd expect an Amazon handset to contain a Texas Instruments OMAP 4430 processor, something that's only found in higher end models at the moment. However, they believe that with the release of the next generation OMAP 5, a price drop for the older chip would make it more cost effective.

One point they were keen to make was that Amazon isn't in the business of making money from its hardware. As we've seen with its Kindle pricing, Amazon is more interested in getting its hardware into the hands of consumers, allowing for sales of digital content later on to make up for any short fall in the original sale.

The report also states that developing a smartphone would be a logical next step for Amazon, thanks to the success of the Kindle ebook reader. If the Kindle Fire can do similarly well, it would make sense for the retailer to branch out into other mobile handset markets as well

With the integration of the smartphone in the shopping experience as well as its popular use as an MP3 player, having its own handset to help push content would certainly open up new avenues of sale for Amazon.