The expected-to-be consumer focused phone is in testing with Asian component suppliers that could be in production by Christmas.
Sources speaking to the Journal say the screen size is roughly between four- and five-inches. It's expected the smartphone will come equipped with access to Amazon's retail store and other lending libraries of video and music content.
But can Amazon replicate its success from the tablet market? The retail giant remains in third place with five percent of the tablet market share, behind Apple with 50 percent, and Samsung with 10 percent of the market.
In the BYOD-crazed workplace, it's less about the market dominating Android smartphone and the highly coveted iPhone, but rather who will get to the third place slot to replace Research in Motion's dwindling market share.
The highly-coveted third place slot --- currently occupied by RIM --- is expected to be left vacant as the BlackBerry maker struggles to keep its head above the water.
With Nokia about to hit rock bottom, it's as though Amazon foresaw the demise of the two phone giants, and continues to watch them sink further into the mud, only to snatch the crown at the last minute.
Should RIM collapse today, tomorrow, or even in a month from now, Microsoft would likely take the slot, despite it owning around 4 percent of the market, compared to the 80 percent that Google and Apple have in the top-spot duopoly.
Whether Amazon can utilise its back-end infrastructure and cloud services could really determine whether the anticipated device makes a bid for the business market. Already, many businesses and enterprises rely on Amazon's cloud services for storage and as an application platform.
If Amazon can get the marketing on the button, it can sway two potential markets: the less lucrative but nevertheless popular consumer market with a shiny handset with links to its retail store, or the enterprise-contract market that rakes in long-term secure revenue.
Or, maybe it's a bluff. The Kindle sells at a loss and the smartphone could too. Sell it dirt-cheap and generate preliminary loss, but it's a market share spinner and it gives Amazon enough time to develop the software strategy. If you've ever used a Kindle Fire, it goes without saying that the software itself isn't exactly finely tuned.
Amazon must be hellbent on taking on the big-wigs in the smartphone space, because other than the RIM-replacement strategy of a back-end data network supported by its cloud services, there's still little reason for Amazon to even enter into the smartphone space.
Image credit: CNET.