(Reuters) - Amazon.com Inc may launch its own smartphone in the fourth quarter of 2012, Citigroup said, citing its supply-chain channel checks in Asia.
In a research note dated November 17, the brokerage said it believes the online retail giant is now jointly developing the phone with the world's top contract cellphone maker Foxconn International Holdings Ltd.
"With the clear success of the Kindle e-Reader over the past 3 years, and Kindle Fire possibly succeeding in the low-priced tablet market, we view this as the next logical step for Amazon," the brokerage said.
It expects Amazon to pay non-recurring engineering fees to Foxconn, but Taiwan's Hon Hai Precision Industry Co Ltd to actually make the device and multiple components.
The brokerage expects the smartphone to adopt a Texas Instruments processor and Qualcomm's baseband chips.
"We expect Amazon's smartphone to be a mid-end device based on the processor it adopts," the brokerage said, and pegged the company's total cost for making such a phone at $150-$170 each.