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Amazon Mum As Kindle Phone Rumors Swirl

Microsoft developers defect to cross-town rival, prompting speculation that Amazon is building its own smartphone.
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Amazon may be developing its own smartphone--with help from some former Microsoft employees.

Robert Williams, formerly a Microsoft senior program manager, used his Twitter feed this week to let the world know that he had bolted from the Redmond campus to downtown Seattle, where Amazon calls home. "Working on a top-secret project called, oops, gotta go," Williams teased on Twitter.

Williams is the second high-profile member of Microsoft's mobile team to defect to Amazon in recent months. Earlier this year Brandon Watson, head of Windows Phone developer experience, also moved to the online merchant.

Amazon's poaching of Microsoft's mobile talent has prompted speculation that the company is developing a smartphone of its own, possibly a Kindle-branded device that would be a companion to the Kindle Fire tablet, launched last September.

Bloomberg reported in that Amazon has gone so far as to strike a manufacturing deal with Foxconn, the controversial Taiwanese company that assembles Apple's iPhone and various Google Android devices. Foxconn has been criticized for subjecting workers to long hours under poor conditions.

Amazon has not commented on the reports.

A smartphone would give Amazon another mobile sales channel, but some analysts believe such a device doesn't make sense as a content delivery vehicle for a vendor that specializes in books.

"Since tablets skew more heavily toward media consumption than smartphones, they are a natural fit for Amazon's commerce and media platform," said Baird & Co. analyst Colin Sebastian, in a research note. "In contrast, smartphones require specialized native apps (e.g., maps, voice, search, email) that would be costly for Amazon to replicate."

Sebastian also noted that hardware is a low-margin business. Amazon's Kindle Fire sells for just $199, a price that some analysts believe is below cost. Amazon is likely hoping Kindle Fire will more than pay for itself by boosting sales of e-books and other digital content.

Microsoft, for its part, is looking to counter Amazon through a joint venture with Barnes & Noble. Under the plan, the two companies will jointly invest in a B&N spinoff that will develop e-reading software for B&N's Nook tablet and Microsoft's Windows 8 and Windows Phone platforms. The spinoff's assets will also include Barnes & Noble's current digital book inventory, as well as its college textbook business.

Amazon has also developed a Kindle App for Windows 8 tablets.

At this year's InformationWeek 500 Conference, C-level execs will gather to discuss how they're rewriting the old IT rulebook and accelerating business execution. At the St. Regis Monarch Beach, Dana Point, Calif., Sept. 9-11.