Hot on the heels of Google unveiling its own branded tablet, Amazon looks set to be readying a smartphone that will compete with Android and the iPhone.

Reports claimed the internet retailer, which unveiled its Kindle Fire tablet last year, is planning a smartphone and is already at the testing phase for the device. Chinese mobile phone maker Foxconn was working on the device, a source familiar with the plans said.

Rumours of Amazon’s intentions have been doing the rounds for some time, with Citigroup analyst Mark Mahaney predicting in November that Amazon was planning to release a smartphone.

A smartphone would give Amazon a wider range of low- priced hardware devices that bolster its strategy of making money from digital books, songs and movies. It would help chief executive Jeff Bezos – who made a foray into tablets with the Kindle Fire – carve out a slice of the market for advanced wireless handsets.

Amazon has refused to comment, although analysts are watching the firm’s patent dealings with interest.

Sources claim Amazon considered buying wireless patents from InterDigital before the US firm said in June that it would sell the assets to Intel for $375 million.

The company also beefed up its patent prowess recently by hiring Matt Gordon, formerly senior director of acquisitions at Intellectual Ventures Management, the company that was founded by former Microsoft chief technology officer Nathan Myhrvold and owns more than 35,000 intellectual property assets.

Google, meanwhile, has already made its major announcement, with the Nexus 7 already taking preorders; rumours are that it will be delivered to stores in the UK next week. The device, which will have a 7in screen similar to the Kindle Fire was unveiled at Google’s developer conference in June. – (Bloomberg)