Amazon.comis developing a smartphone that would vie with Apple's iPhone and handheld devices that run Google's Android operating system, two people with knowledge of the matter said.

Foxconn International Holdings, 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.

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.

Drew Herdener, a spokesman for Amazon, declined to comment. – (Bloomberg)