Will Amazon Challenge Apple With a New Smartphone Next Year?

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Amazon (NASDAQ:AMZN) recently made a splash into the tablet market with its new Kindle Fire.  The move was seen as a way to challenge Apple (NASDAQ:AAPL), and even Barnes & Noble’s (NYSE:BKS) new NOOK tablet.  Now, there is speculation that Amazon may be getting ready to enter the smartphone market.

According to Citigroup (NYSE:C) Investment Research, Amazon is likely to launch a smartphone in the fourth quarter of 2012.  “We believe FIH is now jointly developing the phone with Amazon. However, we believe that Amazon will pay non-recurring engineering fees to FIH, but the device and multiple components will actually be manufactured by Hon Hai’s TMS business group (the same business group that makes Amazon’s e-reader and the 8.9-inch Amazon tablet). We believe the smartphone will adopt Texas Instrument’s (NYSE:TI) OMAP 4 processor and is very likely to adopt Qualcomm’s (NASDAQ:QCOM) dual mode 6-series standalone baseband given Qualcomm has been a longtime baseband supplier for Amazon’s e-reader.”

Investing Insights: Jeff Bezos has Fire to Ignite Amazon’s Stock During the Holidays.

Before changing Bandwagons, investors should consider the ongoing demand strength in Apple products.  A Nelson survey finds that the Apple iPad is the most desired consumer electronic among kids ages 6-12 for this holiday season.  The iPod Touch and iPhone came in second and third, respectively.   The Apple iPad is also the most desired  consumer electronic among kids 13 and older.

Other tech and smartphone plays include: AT&T (NYSE:T), Verizon (NYSE:VZ), Sprint (NYSE:S), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), and Research in Motion (NASDAQ:RIMM).

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