Amazon Expected to Release a KindlePhone Next Year

Amazon recently unveiled the Kindle Fire. The new tablet has seen a fair amount of success, although it’s definitely not an iPad killer. What’s next for Amazon? A phone, of course!

While details on such a device are scarce, it’s believed that Amazon will launch a KindlePhone in 2012. Android is expected to be the operating system of choice…

AllThingsD, citing the Citigroup research department:

“Based on our supply chain channel checks in Asia led by Kevin Chang, Citi’s Taipei-based hardware research analyst, we believe an Amazon Smartphone will be launched in 4Q12. Based on our supply chain check, we believe FIH is now jointly developing the phone with Amazon. However, we believe that Amazon will pay NRE (non-recurring engineering fees) to FIH but the device and multiple components will actually be manufactured by Hon Hai’s TMS business group (the same business group that makes Amazon’s E-reader and the 8.9” Amazon tablet). We believe the smartphone will adopt Texas Instrument’s OMAP 4 processor and is very likely to adopt QCOM’s dual mode 6-series standalone baseband given QCOM has been a long-time baseband supplier for Amazon’s E-reader.”

The phone is epected to cost between $150 and $170 to manufacture, and the price could be as high as $243 if Amazon wants to make a 30% gross margin. Amazon loses money on the Kindle Fire by offering it at such a cheap price, but the company is betting on customers buying into the Amazon ecosystem by purchasing the hardware.

Like Apple, Amazon has a distinct focus on creating an experience, not just a device. Amazon Kindle books, apps, music, movies, etc. are all used to keep customers entrenched in the Amazon brand. It wouldn’t be a stretch at all to assume that Amazon will take an initial hit on a KindlePhone by making it super cheap. The success of the Kindle Fire will largely determine the future of any sort of Amazon smartphone, so only time will tell.

What do you think about Amazon releasing a KindlePhone?