Amazon Planning Smartphone to Rival Apple iPhone: Report

Amazon is making plans to enter the ultracompetitive smartphone market with its own handset, according to Bloomberg.

Online retailer Amazon€™s low-cost Kindle Fire shook up the tablet market upon its release in November 2011, and now it looks to be going after Apple€™s best-selling iPhone smartphone with a handset of its own, according to a report from Bloomberg, which quoted two unnamed sources with knowledge of the plans. According to one of the sources, Amazon is working with Chinese handset maker Foxconn to build the device, and Amazon is also reportedly acquiring technology patents to avoid wireless infringement claims.

Amazon also recently hired the former senior director of acquisitions at Intellectual Ventures Management, Matt Gordon, who will take up the post of general manager for patent acquisitions and investments at Amazon, according to Gordon€™s LinkedIn profile page. For four years, he was director of IP licensing at Microsoft. According to data compiled by Bloomberg, Amazon has been the subject of 25 patent-related lawsuits in the past two years.

The move into smartphone territory, currently dominated by Apple and Samsung smartphones, would be a natural extension of Amazon€™s strategy with the Kindle Fire, which runs a modified version of Google€™s Android operating system. It remains to be seen whether Amazon will use Android for a smartphone device. Google Android continued to grow its share in the U.S. smartphone market, accounting for 50.9 percent of smartphone subscribers, while Apple captured 31.9 percent, according to a recent study by IT analytics firm comScore. Samsung was the top handset manufacturer overall with 25.7 percent market share.

Nearly 110 million people in the U.S. owned smartphones during the three months ending in May, according to the July 2 report, up 5 percent from February. Google Android's market share rose 0.8 percentage points. Five years after the release of the first iPhone, Apple€™s share rose 1.7 percentage points. RIM ranked third, with 11.4 percent share, followed by Microsoft (with 4 percent) and Symbian (with 1.1 percent).

On the tablet side, Apple€™s iPad continues to dominate, with nearly 70 percent market share, while Amazon's first-quarter Kindle Fire sales tanked. However, the company is reportedly planning a larger version of the Fire and a midyear 7-inch refresh. A report this week from the China Times said Amazon has ordered 2 million units of its next-generation Kindle Fire tablet from Quanta Computer, a Taiwan-based manufacturer of notebook computers and other electronic hardware.