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Amazon Kindle smartphone rumour mill kicks into overdrive

More details surrounding Amazon's reported Kindle Phone have surfaced, with a Wall Street Journal report now saying that Amazon is testing the gadget as we speak.

An unnamed source close to Amazon told the Journal that the device currently being tested measures between four and five inches, the new standard in smartphone handsets. Samsung's Galaxy S3 has a 4.8-inch screen, while the next-generation iPhone is rumoured to come with a 4-inch display.

Rumours of an Amazon smartphone emerged late last year, when Citigroup analyst Mark Mahaney said that an Amazon handset would launched in 2012's fourth quarter, based on a supply chain check in Asia. The phone, he said, is being developed by Amazon and Foxconn International Holdings.

Amazon did not immediately respond to a request for comment.

Mahaney also predicted a production cost of £95 to £110, with a retail price tag in the same range.

The term "phablet" – which ABI Research defines as a touch screen between 4.6 and 5.5 inches – has been thrown around in reports of Amazon's device blueprint. Global shipments of the hybrid smartphone/tablet devices - like the Samsung Galaxy Note - are expected to surpass 208 million in 2015, ABI Research said.

Amazon has thus far stuck to tablets and eBook readers with its Kindle lineup. A second-generation version of the Kindle Fire tablet is already on the assembly line, according to a report last week by the China Times.

" has much of what it takes to be successful," tech industry analyst Jeff Kagan said in a statement. "The big question, is can they be successful in the wireless phone business?"

Kagan said Amazon's growing customer base in an already rich market, as well as the lead it enjoys in e-book sales, could give the company a boost. At this point, the Kindle is generally regarded as an arm of the company's book-selling enterprise.

Chris DeVore, a general partner at Seattle's Founders Co-Op, argued in a blog post that Amazon wants to control "100 per cent share of consumer wallet - whether you're buying books, or clothing, or digital goods, or even local services, they want you to make Amazon your shopping platform of record."

DeVore suggested that Amazon might jump into the phone market with a free handset but couple it with something like Amazon Prime. "I'm not sure if even Amazon can afford to play the free card, but if anyone can, they can. And if they do - and do it well - it will catapult them from late entrant to mobile industry disruptor in a single holiday selling season," he wrote.

The Journal, however, said production of the Android phone might not begin until the end of 2012 or beginning of 2013.