According to the Bloomberg report, Chinese ODM giant Foxconn is working with Amazon to create an Android smartphone. People with "knowledge of the matter" claim that Amazon is also looking to acquire patents that cover wireless technology to help it defend against allegations of infringement.
Since Amazon has already enjoyed considerable success with its Kindle e-book reader and tablet hardware, a smartphone would be the next logical step. After all, Amazon already has most of the infrastructure in place that would be required by a smartphone. It has a flourishing app store and media distribution service.
On top of that, the company has experience of handling the carriers thanks to its Amazon Wireless store.
It also has experience with Android, having heavily reworked Google's mobile operating system for use on the Kindle Fire tablet. In fact, the version of Android that Amazon dishes out with the Kindle Fire is so heavily customized that it hardly looks like Android at all.
And that's a strength that Amazon could bring to a smartphone.
While there's no doubt that Android smartphones have experienced tremendous success, one of the complaints that I hear leveled against the platform is that it isn't particularly friendly, especially to those who don't consider themselves to be technically literate.
This is exactly what Amazon managed to do with the Android platform with the Kindle Fire. Here is a tablet that came from nowhere to capture a massive market share in a matter of months. As soon as Amazon released the Kindle Fire, all the other players -- including Android powerhouse Samsung -- started losing ground to the new tablet on the block.
And part of that success is undoubtedly down to the ease of use of the platform. Amazon took a platform that, at best, felt awkward on tablets and made it work. Not only that, but it polished the entire user experience to a point where people who had never touched a tablet before could pick up a Kindle Fire and start using it.
This is a trick that only Apple had previously managed to pull off -- so far.
The strength that Amazon bought to an Android tablet is exactly what it could bring to an Android smartphone -- a much-needed dumbing down of the platform that could give it an enormous advantage over both Apple iPhone and the entirety of the Android ecosystem. While the likes of Samsung, HTC and Sony would hate this -- because it's more than likely that Amazon would do to the Android smartphone market what it did to the Android tablet market, and hammer the competition -- consumers would love the chance to buy an easy-to-use smartphone from a name that it knew and trusted.
Any handset that Amazon releases is likely to be labeled an "iPhone killer" at some point, so it's worth speculating over what effect a "Kindle phone" would have on the iPhone.
My prediction is that it would have little or no effect on the iPhone. Apple appears to operate in an entirely different market to other players in that as far as iOS devices are concerned, where sales are on the whole constrained by the supply chain and production line, not consumer interest which seems to remain at a perpetual high.
Unless Amazon can pack some serious secret sauce into whatever smartphone it comes up with -- and to put a noticeable dent iPhone sales, it would have to be hardcore secret sauce -- then the only players that need to be worried are those already trying to sell Android phones.
A dumbed-down Android experience could be just what average users are waiting for, but it won't be an iPhone killer.