Amazon Developing Smartphone Says Citigroup

Amazon is looking to further its expansion into the hardware market by developing a smartphone, according to Citigroup analysts.

The smartphone would supplement Amazon’s recently launched Kindle Fire tablet and assist it in its attempt to compete against Android manufacturers and Apple.

No smoke without Kindle Fire

Citgroup claims to have spoken to electronics manufacturers in Taiwan and says that Foxconn, the Chinese manufacturer that produces the iPhone for Apple, is being paid a one-off fee to develop the device, which would then be manufactured by Kindle and Kindle Fire manufacturer Hon Hai.

Amazon would reportedly be willing to sell the device at a loss, just like it does with the Kindle Fire, which costs $199 (£126), despite costing Amazon $210 (£133) per unit to produce.

“For a normal brand like HTC, they need to price the product at $243 to make 30 per cent gross margin,” said Citigroup, “If Amazon is actually willing to lose some money on the device, the price gap could be even bigger.”

The Kindle Fire launched in the US earlier this week, and Amazon’s first foray into the tablet arena is heavily tipped to be a serious challenger to Apple’s iPad.

The tablet runs an adapted version of Google’s Android mobile operating system and boasts a multi-touch display, 8GB of storage, dual core Texas Instruments OMAP4 processor and a battery life of eight hours reading and seven and a half hours of video playback.

It comes equipped with the Silk web browser and access to Amazon’s app store and its low price point has proved hugely popular with those who had rushed to pre-order the device.