Kindle Smartphone 'to hit market in 2012' Amazon looks set to release a smartphone in 2012 to build on the success of its Kindle Fire tablet. AMAZON looks set to release its own smartphone in 2012, according to Citigroup with experts tipping the move is designed to push the company's digital media content. Amazon is reportedly working with manufacturer Foxconn to develop a low-cost phone using the Texas Instrument's OMAP 4 processor, which runs on the popular $199 Kindle Fire. The connectivity chips are believed to come from Qualcomm. The component parts are expected to cost less than $100. "Amazon smartphone may be coming next year - based on our supply chain channel checks ... we believe an Amazon smartphone will be launched in 4Q12 [the fourth quarter of 2012]," Citigroup analyst Mark Mahaney said. Based on our supply chain check, we believe FIH [Foxconn] is now jointly developing the phone with Amazon. "With the clear success of the Kindle e-reader over the past three years, and Kindle Fire possibly succeeding in the low-priced tablet market, we view this as the next logical step for Amazon," Mr Mahaney said. We continue to believe Amazon has now set its eyes on the mobile (and tablet) media and product consumption frontier. Mr Mahaney and his team estimate that Amazon's phone may cost $150 to $170 to develop, with many tech experts predicting the company will sell the phone at or near cost price. For a normal brand like HTC, they need to price the product at $243 to make 30 percent gross margin. If Amazon is actually willing to lose some money on the device, the price gap could be even bigger," he added. Losing money on the phone to gain sales for digital media sold through such a device would allow Amazon to reach a wider audience, experts say. Reports suggest the Kindle Fire is being sold at a loss as part of an overall strategy to push services and quality content to consumers via an affordable device. The Kindle Fire costs $203 to make and is sold for $199, according to the Wall Street Journal. Fuelling the rumour is Amazon's purchase of voice start-up Yap which has developed voice to text and speech recognition technology. Amazon's Kindle Fire is tipped to be a big seller this Christmas and in the US Android users have embraced it and the video services it offers which allow users to watch TV shows and moves for $79 a year.