Amazon planning smartphone to compete with Apple iPhone, report says

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AP
(CBS News) Amazon may be working on a smartphone to compete with the Apple iPhone.

The online retail giant launched the Kindle Fire last year and gave consumers a cheaper option to the Apple iPad. The company may be looking to repeat itself, but this time in the smartphone market.

Full coverage of Amazon at Tech Talk

Amazon is developing a smartphone that will run Google's mobile operating system Android, Bloomberg reports - citing two sources close to the matter.  In addition, the company is also implementing a strategy to arm itself with patents for wireless technologies, in order to avoid potential lawsuits. The device will reportedly be manufactured by Foxconn - the company that also makes iPhones and iPads.

There are no details on the device's specifications or price. However, if history repeats itself, Amazon is likely to launch a device that is cheaper than the iPhone. Although the company is rumored to release a smartphone, this move may be more about content. Amazon.com is one of the largest online retailers in the world.

Last year, analysts speculated that Amazon purposely launched hardware that would lose the company money, but rake in profits by selling movies, books and music on the Amazon.com via the Kindle Fire.

By saturating the market with a device that was deeply integrated with Amazon.com, it would give the company a good shot at losing money in the short term to make a steady stream of continuous profit in the future.

Amazon did not immediately respond to CBS News' request for comment.

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