Report: Amazon working on a smartphone

For the holiday season of this year, Amazon is releasing its first Android tablet. Next year, it may release its first Android smartphone.

That is the conclusion drawn from Citigroup analyst Mark Mahaney, who said in a research note, “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.”

Mahaney noted that the phone is likely to be developed with the help of overseas mega component manufacturer Foxconn.

The flagship Kindle Fire tablet has so many positive factors working in its favor. First, at $199, it’s cheap. It blows other offerings like the Xoom and Galaxy Tab out of the water.

Second, “Kindle” is an immensely recognizable brand and carries a lot of weight throughout the industry – again, something that names like “Xoom” don’t have.

And of course, because it’s Amazon, the Kindle Fire gets free unlimited publicity on the world’s largest online store.

It could bring a lot of those same factors to the table with a Kindle phone. The biggest issue with Android is fragmentation – you never know if an Android app will work on your particular phone. If there was a phone that was seen as “the” Android phone, though, it could be the model upon which all other Android handsets are built and help with that issue.

Because Amazon’s strategy with all its Kindle devices is to get a large user base and then collect money from digital content, it could also price an Android phone at much lower than the competition, or at least below what has become the standard price of $200.