Amazon, With Suppliers, Is Testing a Smartphone

Amazon.com Inc. AMZN -0.50% is working with component suppliers in Asia to test a smartphone, people familiar with the situation said, suggesting that the Internet retail giant, which sells the Kindle Fire tablet computers, is considering broadening its mobile-device offerings.

Officials at some of Amazon's parts suppliers, who declined to be named, said the Seattle-based company is testing a smartphone and mass production of the new device may start late this year or early next year.

Suppliers in Asia are testing a smartphone for Amazon, but how will the giant online retailer try to forge a path through the dense smartphone market? The WSJ's Lorraine Luk has the details.

A smartphone from Amazon would spur more competition in the already crowded market. While Apple Inc.'s AAPL -0.60% iPhone and Samsung Electronics Co.'s Galaxy handsets continue to dominate the lucrative high-end segment, the overall smartphone market is expanding rapidly with many players offering new models that are diverse in terms of sizes, technological features and prices.

After leading the market for electronic books with its Kindle readers, Amazon entered the tablet market last year with its Kindle Fire, which runs on Google Inc GOOG -1.74% .'s Android operating system. The device's $199 price tag, compared with $499 or higher for Apple's iPad, indicated that Amazon, instead of seeking profit on the sale of the tablets themselves, is trying to make money by selling digital content on the devices.

One person said that the screen of Amazon's smartphone currently being tested measures between four and five inches.

Bloomberg last week reported that Amazon was developing a smartphone.

In May, people familiar with the matter said Apple's next iPhone, which is expected to come out later this year, will likely have a screen larger than four inches, compared with the current iPhone's 3.5-inch display. Samsung's latest flagship smartphone, the Galaxy S III, has a 4.8-inch screen.

The market for smartphones is rapidly expanding with demand particularly strong in China and other emerging markets where many people are replacing their traditional cellphones. Research firm IDC expects global smartphone shipments to grow 38.8% this year to 686 million units.

While Apple and Samsung together account for about half of the world's smartphone shipments, the market is becoming more crowded with an increasing number of Chinese handset makers selling inexpensive smartphones.

source