Rumor Mill: Amazon's Kindle smartphone delayed by production challenges

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Amazon's (NASDAQ:AMZN) long-rumored Kindle-branded Android smartphone is still in the pipeline but will not reach consumers until at least the third quarter of 2013 due to production snafus, according to a new report.

Citing sources in the "flat panel supply chain," DigiTimes reports Amazon manufacturing partner Foxconn is conducting engineering verification tests on the Kindle phone but the process has experienced a series of speed bumps. While Amazon originally planned to complete testing during the current quarter and begin manufacturing early in the second quarter, Foxconn's Ensky Tech subsidiary is now unlikely to enter mass production until June.

Rumors of an Amazon smartphone have circulated for months. Citing sources with knowledge of the matter, Bloomberg reported in July 2012 that Amazon tapped Foxconn to develop the device, adding the digital retailer has assembled a portfolio of patents covering wireless technologies to fend off potential allegations of infringement. A subsequent Verge report added the Amazon smartphone will run the same forked Android variant powering the digital retailer's Kindle Fire tablet.

A smartphone fits squarely within Amazon's larger vision for digital media dominance. Unlike Apple (NASDAQ:AAPL), which relies on content from its iTunes digital media storefront and App Store to boost sales of hardware like the iPhone and iPad--and unlike Google (NASDAQ:GOOG), which looks to Android to fuel revenues derived from its core advertising and search services--Amazon depends on affordable hardware to drive sales of e-books, music, movies and related content offerings. Its digital media revenues totaled $6.51 billion during the fourth quarter of 2012, up 8 percent year-over-year, and for the second year in a row, the Kindle Fire HD tablet was the company's best-selling and most-gifted item.

Amazon founder and CEO Jeff Bezos has strongly hinted Amazon plans to launch additional devices. Speaking to television interviewer Charlie Rose last November, Bezos joked "I agree that there are a bunch of rumors that we might do a phone." After Rose said "Of course, that answer leads us to believe that you are going to do it. You're just waiting for the right opportunity," a laughing Bezos responded "Well, you'll just have to wait and see."

For more:
- read this DigiTimes article
- read this Forbes article

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