Largest online retailer Amazon is currently planning to release a competitive smartphone that will battle heads on with Apple's iPhone and Samsung wide ranging devices, Bloomberg reported.

Amazon shook the tablet market last year with the release of incredibly cheap Kindle Fire.  Now, the online retail company plans for Apple and Samsung to make a run for their money by releasing a rival smartphone for iPhone.

Bloomberg cited two unnamed sources who have insider information about Amazon's plans. According to one of the sources, Amazon is working with Chinese manufacturer and Apple's partner Foxconn to build the device, and Amazon is also reportedly acquiring technology patents to avoid wireless infringement claims and lawsuits.

Amazon may benefit in partnering with Foxxconn hardware-wise to be at par with other smartphones in the market. Moreover, Amazon hired the former senior director of acquisitions at Intellectual Ventures ManagementMatt Gordon who will take up the post as general manager for patent acquisitions and investments at Amazon.

Amazon's decision to make a smartphone is a natural move for the company since it already released other media devices. The smartphone market is currently dominated by Apple and Samsung handsets.

It remains to be seen if Amazon will still user Google's Android as its OS platform. Google Android continued to grow its share in the U.S. smartphone market, accounting for 50.9 percent of smartphone subscribers, while Apple captured 31.9 percent, according to a recent study by IT analytics firm comScore. Samsung was the top handset manufacturer overall with 25.7 percent market share.

Australia is one of the strong markets of Android. Android's market share surges in just a year from 32.2% in 2011 to 52% in 2012. Amazon will surely benefit from the popularity of the OS platform.

Aside from the smartphone, China Times reported that Amazon will release the new Kindle Fire 2 will be released on August 7. This is somehow supported by CNET's report that claimed the Amazon will be releasing the devices a week earlier. The publication also added that an NPD DisplaySearch analyst has predicted that as many as four new tablet models are in the works at Amazon, based on supply chain data.

One of the Kindle Fire 2 tablets will have a 1024x600 display and no camera, and another with a 1280x800 screen with a camera. By the end of the year, a third 7-inch tablet could add 4G to the higher-end model, and a subsequent 8.9-inch device would pack on a 1920x1200 display.

Amazon did not release any official statement about this matter.

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