Foxconn International Holdings Ltd. (2038), the Chinese mobile- phone maker, is working with Amazon on the device, said one of the people, who asked not to be identified because the plans are private. Amazon is seeking to complement the smartphone strategy by acquiring patents that cover wireless technology and would help it defend against allegations of infringement, other people with knowledge of the matter said.
The idea of Amazon making its own phone should be no real surprise to anyone. Amazon's business plan is all abut selling digital media; be that books, music or movies. They've already launched the Kindle Fire tablet to compete with Apple's iPad. It's sold at a highly reduced price and Amazon looks to make the money back from digital purchases from its store. If it followed the same format with its alleged iPhone competitor then it could be a very compelling device based on initial cost.
There is no information as to what operating system the device could run although at this stage Google's Android would probably top the list. The Kindle Fire runs a forked and heavily modified version of Android and keeping phone compatible with tablet is the most probable route for this too.
Having said that, Amazon is apparently looking to buy as many patents as it can and has even taken on Matt Gordon, formerly senior director of acquisitions at Intellectual Ventures Management LLC. His role will entail patent acquisitions and investments at Amazon leading to speculation that Amazon may release its own operating system.