Amazon is gearing up for a push into the smartphone market, as the web giant aims to replicate the success of its Kindle e-reader and tablet range.
The online retailer is working in conjunction with Foxconn to develop a mobile handset, according to Bloomberg.
The firm has experienced huge success with its budget Kindle e-reader and Kindle Fire tablet, as it has closely tied these devices to its online media operations.
Users have been able to download digital books, movies, TV shows and music directly to devices from the firm's online store.
There are no details about the type of device Amazon is set to launch,but based on the e-reader and tablet strategies, it is likely to be a budget handset that is tied to its services.
The Kindle Fire tablet has a basic version of Android and the same OS could be applied to a mobile device.
Amazon is the latest in a long line of firms trying to break into the lucrative, but highly competitive, mobile market.
Social networking giant Facebook is also rumoured to be working on a device, having hired former Apple engineers who worked on the iPhone and iPad devices.
Despite the resources at the disposal of Amazon and Facebook, success in the smartphone market is not guaranteed.
Established device manufacturers, such as Dell and HP, have had to discontinue products, including the Dell Streak and Pre device, after they failed to gain traction.
Samsung and Apple are the current market leaders when it comes to high-end smartphones, so the emergence of Amazon and Facebook as competitors could dent sales.
However, the news is more likely to worry Nokia and RIM who seem to be haemorrhaging market share at the moment.
RIM has delayed its BlackBerry 10 operating system until 2013 and Nokia is struggling to get foothold in the market with its Windows 7 devices.
