Look Out Apple iPhone, Amazon May Produce Smartphone

Amazon has been stepping in Apple's tracks recently. Company CEO Jeff Bezos has been hailed in the past month by many as the heir apparent to the late Apple CEO Steve Jobs as the world's reigning innovative tech leader. Amazon is also successfully going after Apple's industry-leading iPad tablet with its new, lower-priced Kindle Fire tablet. Not to mention that Amazon is pushing hard against Apple's content distribution model with more content of its own.

But now comes interesting tech industry news suggesting that Amazon may go after Apple at its core -- taking on the company's global bestselling iPhone. Apple has the iPad, the world's bestselling tablet, and it has the iPod and Mac computers and iTunes and more, but the iPhone is the backbone of Apple's robust sales, growth and profitability.

A top tech analyst is predicting, however, that Amazon is likely to release its own smartphone for under $200 next year. Citigroup analyst Mark Mahaney said in a research note that Amazon may sell the smartphone for as little as $170. Citing supply-chain channel checks in Asia, he said Amazon may release its first-ever smartphone by the fourth quarter of 2012.

For those keeping score, that's about the same time frame anticipated for the release of Apple's highly-awaited iPhone 5, said to be Steve Jobs' last big signature product.

If it's true, and indications and a wise hunch suggest they are, Amazon would compete with Apple and others in the smartphone realm using price as a major marketplace advantage. The company sells its Kindle Fire tablet at $199, for instance, far cheaper than the entry-level iPad, which begins at $499.

Amazon is also the global e-reader device leader with its Kindle.

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, said Citigroup's Mahaney, in the research note.

The smarthphone would likely run on the Google's Android operating system, like the Kindle Fire tablet does. Mahaney said Amazon's smartphone would 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.

Mahaney expected Amazon's manufacturing costs for the smartphone for be between $150 and $170 each.

If the report is on target, Apple could be in trouble. Already, Apple's record-setting iPhone 4S is showing signs of slowing sales after breaking strong out of the gate. Amazon is expected to sell as many as five million Kindle Fire tablet devices in the fourth quarter of this year, after launching the product on Nov. 14, undoubtedly making a dent in Apple iPad sales growth.

There's no reason to believe that a smartphone from Amazon priced right wouldn't do the very same thing.