4 Things You Need to Know About Amazon's Smartphone

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Inside An Amazon.com Distribution Center On Cyber Monday
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It's the rumor that just won't die. Amazon.com (AMZN) putting out a smartphone? That's so 2012. That's so 2013. However, The Wall Street Journal cites sources claiming that the leading online retailer will introduce a proprietary wireless phone this year.

The financial icon is hearing from developers and suppliers that Amazon will start ordering hundreds of thousands of these devices later this month with plans to hit retailers by the end of summer.

The details are getting too specific to ignore, just as years of increasing chatter about Amazon diving into tablets and set-top streaming boxes ultimately panned out. What do we know? What can we expect?

Amazon's Kindle Fire Set the Stage for Developer Support

Amazon's smartphone is likely to be a tweaked version of Google's (GOOG) Android, similar to the forked operating system it introduced when it entered the tablet market with Kindle Fire. This was initially seen as a challenge. The Kindle Fire was cheap, but it couldn't access the entire Android app universe.

Native support of popular applications was an initial issue, but developers eventually realized that it's better to work with Amazon than to work against it. This doesn't mean that makers of popular programs won't need a little more persuading. Tech blog Re/code is reporting that app developers are being won over by money, assistance and the potential of being preloaded into the phone. Amazon is also holding up Amazon Web Services -- Amazon's popular cloud-hosting platform -- as a carrot.

Amazon's working on a solution that would seamlessly port Android apps over to its forked operating system, but until that day arrives it wants to make sure that it doesn't lose potential customers because of weak developer support.

The New Phone Will Either Be Cheap or Raise the Bar

Amazon isn't afraid to take a hit on the hardware, and that's something Apple (AAPL) hasn't dared to try.

The original Kindle Fire hit the market reportedly near cost. Amazon figured the real money would be made in its growing digital ecosystem of video, publications, music, software and games. The company recently took a different tact with Fire TV, priced at the high end of set-top streaming devices but with features sorely lacking in the existing media players.

Amazon will reportedly try to raise the bar first. Sources tell The Wall Street Journal that the phone will be able to display 3-D images -- without glasses -- as a result of retina-tracking technology embedded in four front-facing camera sensors. This would create wild hologram-like visuals if true, and it's something that would set itself apart.

If the 3-D display gets nixed, it's a safe bet that Amazon will try to win this war on price. Reports already indicate that a cheaper Amazon smartphone will go for emerging and other overseas markets, where phones aren't subsidized by carriers the way that they are in this country.

Amazon is Going to Market the Heck Out of It

Amazon rang up $74.5 billion in sales worldwide last year, and it knows the value of its landing page. New Amazon-branded products tend to get top billing on the site. Its Fire TV was promoted for more than a week until its initial inventory sold out. It's safe to say that Amazon will do this again.

This is what Amazon does. Unlike the countless smartphone makers trying to make a dent on Apple's iPhone stronghold or stand out in a sea of Android devices, Amazon can control the experience of anyone that comes to shop at its popular online store.

Amazon Prime Will Once Again Play a Part

Amazon offers two-day shipping of Amazon-warehoused goods to shoppers willing to pay what will now be $99 a year for Amazon Prime. It hasn't forgotten its loyal Prime customers in diving into e-readers with the Kindle, tablets with Kindle Fire and set-top media players with Fire TV. Realizing that those customers will rely more on digital media than physical goods it has made the transition pay off.

Amazon Prime now offers monthly e-book rentals from a growing list of books and a large catalog of movies and TV shows that can be streamed at no additional cost to the existing Prime membership. It remains to be seen what it can offer smartphone buyers, but it's a safe bet that Amazon will find a way to get its millions of Prime members to be early adopters of the new phone.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple and Google. The Motley Fool owns shares of Amazon.com, Apple and Google. Try any of our newsletter services free for 30 days.‚Äč

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