Amazon is developing a smartphone to compete with Apple's iconic iPhone and various devices that operate on Google's Android platform, Bloomberg reported on Friday. Amazon is reportedly working on the phone with Apple supplier Foxconn in China. Such a project would fit well with Amazon's strategy of selling low-priced, loss-leader devices that drive profits by providing consumers an easy mechanism to buy Amazon's digital books, movies, and music. Amazon's Kindle Fire, for instance, has defied skeptics and made gains on Apple's iPad and other leaders in the tablet market. Can Amazon survive in the smartphone market, too, or is it foolish to even try?

Amazon would be an instant contender: This makes "perfect sense," says Roberto Baldwin at Wired. A smartphone would fit well in "the current Amazon ecosystem," acting as the "ultimate vehicle for impulse buys" of the company's growing library of digital books, music, movies, and TV shows. That media collection is Amazon's secret weapon. The etailer has the ability to subsidize its phones, selling them at rock bottom prices that make competitors "look stingy," because Amazon makes its real money from selling content, not hardware.
"Why an Amazon smartphone launch makes perfect sense"

But Amazon has to offer more than low prices: The Kindle Fire did "a remarkable job" of carving itself a budget-friendly niche in the tablet space, says Chris Velazco at TechCrunch. But "just being cheap" won't be enough to compete in the "terribly competitive" smartphone world, where plenty of carriers subsidize their phones. If Amazon doesn't have "a hook," like groundbreaking features or a "super-cheap unlocked" device allowing users to pick any provider, it's wasting its time.
"Amazon is reportedly working on a smartphone, but cracking the market won't be easy"

It's way too early to say: Remember, this is still just a rumor, says Eric Zeman at Information Week. If Amazon does offer a smartphone, what operating system will it run? Which carriers will sell it? Will it offer top-notch specs and a low price? Will Amazon smartphone buyers get "discounts on digital goods"? Once somebody answers those questions, it will be easier to say whether an Amazon phone has a fighting chance.
"Amazon plans Android smartphone"