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Amazon Developing Smartphone With Facebook Phone Maker HTC

Amazon Developing Smartphone With Facebook Phone Maker HTC

Amazon (NASDAQ: AMZN) is reportedly building a smartphone with HTC (OTC: HTCKF), creator of the first and only phone designed specifically for Facebook (NASDAQ: FB).

That ill-fated handset, known as the HTC First, did not turn out to be a huge source of profit. This prompted AT&T (NYSE: T) to reduce the contract price from $99.00 to $0.99.

According to the Financial Times, HTC is now working with Amazon to develop three phones for the retail giant.

One of them is at an "advanced stage of development," but a source warned FT that Amazon may not release the product just yet. Amazon has apparently changed its release plans before and may consider doing so again.

The Rumors Continue

This is the latest in a long line of rumors surrounding Amazon's plans to develop a smartphone.

Jeff Bezos, the founder and CEO of Amazon, happily teased the existence of an Amazon phone during an interview with Charlie Rose last year.

Related: Amazon's Phone is a 'Low-Risk Strategy' That Could Pay Off

In more recent months, the company denied rumors that it plans to produce and sell a smartphone for free.

Playing With Fire

When Amazon entered the tablet market in 2011, it had the luxury of being the only company with a decent-quality tablet for less than $250. This allowed the firm to sneak up on the competition and take 22 percent of the U.S. tablet market.

Smartphones are a whole other story. The industry is not new, and it is not dominated by one Cupertino, California-based empire. There are hundreds of phones targeting multiple consumers, who are seeking multiple price points. If a consumer is not satisfied with what Apple (NASDAQ: AAPL) and Samsung have to offer, there are plenty of other manufacturers ready to fill the void.

This is going to make it very difficult for Amazon to enter the smartphone space.

Nokia (NYSE: NOK), one of the oldest and most recognizable phone manufacturers in the world, has produced some of the best smartphones available. But consumers still tend to prefer handsets from other manufacturers, most notably Apple and Samsung.

If Nokia can't make waves with original products, what can Amazon hope to accomplish with a handset from HTC?

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ


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