A report from Bloomberg suggested that Amazon is preparing for an Android-based smartphone, citing resources from people with knowledge.

Originally starting as an online book seller, Amazon.com has expanded its business and created various versions of e-book reader Kindle. Perhaps its Kindle Fire tablet is not bringing enough profit to its digital content business compared to Apple’s iPad, hence the rumor came that Amazon is planning to develop an Android-based smartphone, which some refers to as “Kindle Phone”.

Foxconn, a Chinese hardware manufacturer known by its production for some of Apple’s products, is said to be working on the Amazon’s first smartphone. If it is true, this verifies a Citigroup analyst’s saying last November that Amazon was working to create a smartphone.

Bloomberg’s report also mentioned that the production of a smartphone is from Amazon’s intent of directly competing with iPhone and other Android smartphones.

The e-retailing company is preparing enough thinking for the future severe battles in the smartphone market. Taking the lesson from nowadays patent issues and to avoid trivial legal lawsuits, Amazon will also purchase some wireless patents. It has hired a senior patent czar, Matt Gordon, who was working for Intellectual Ventures Management LLC previously to protect it from being dodged by legal trouble as Samsung is encountering.

So far very few information of the new smartphone is revealed, including its launch date. However, some analysts speculate the device will be powered by a customized Android operating system coming together with Amazon’s online store and media contents. That will be similar as Amazon did with the Kindle Fire tablet.

However, Amazon’s move has been analyzed with many difficulties ahead. Though its successful Kindle Fire was reviewed as a cost-effective mobile media center, it has been facing powerful competition from Google’s newly released 7-inch tablet Nexus.

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