Could Amazon be entering the smartphone business? Bloomberg is reporting that Amazon is working with Foxconn on a new smartphone product, which would go head-to-head with iPhone and Android devices.

Amazon is also allegedly looking to acquire a portfolio of wireless technology patents that would help it stand up against the competition.

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 Officer Jeff Bezos — who made a foray into tablets with the Kindle Fire — carve out a slice of the market for advanced wireless handsets.

Amazon made quite an impression with its heavily-customized Android tablet, Kindle Fire, last year. By also offering a smartphone, Amazon can expand its library of digital content across mobile devices of different form factors.

The new iPhone should launch this Fall. If Amazon wants a chance to compete, they should really have their supposed iPhone killer at the ready and have amazing features Apple’s next gen iPhone doesn’t. Thoughts?

[via MacRumors]