Amazon prepping a smartphone to take on Android, iPhone

Company also seems to be planning to acquire patents related to wireless technology to complement its smartphone strategy. A phone would certainly be a nice fit to company's portfolio of low-priced hardware that brings consumers to its digital products like e-Books, videos and songs.

Amazon has entered the much lucrative tablet market last year and according to the industry rumours, it is already working to release a second version of the tablet, proving that Kindle Fire was indeed a success for the company despite zero margin on the hardware.

E-Commerce giant declined to comment on the smartphone plans to Bloomberg.

This is not the first time that we are hearing about Amazon's smartphone, in November last year, a Citi analyst also stated that Kindle maker is working on a smartphone.

Amazon has also hired Matt Gordon, formerly senior director of acquisitions at Intellectual Ventures Management, to look after its patent acquisition plans recently and is considering buying wireless patents from InterDigital Inc.

There is no word on the operating system in this Amazon smartphone, but considering that fact that it used Android in Kindle Fire, we might see a similar forked version of the Google OS in this smartphone. Android is an open source operating system by Google, and is freely available to developers around the world.