After being bested by the quad-core processor, HD display and superior software of Google and ASUS’ Nexus 7 tablet which will, in a weeks’ time, be sold at the same price as their Kindle Fire, Amazon is reportedly working on building their own smartphone. Check out the details of the report after the jump.

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The news comes from Bloomberg in the form of a report in which they cite two people “with knowledge of the matter” who claim that Amazon is working on a smartphone that will battle it out with the Apple iPhone and Android smartphones. The company is actively seeking patents related to wireless technology to help defend their smartphone from habitual lawsuit filers like Apple. The device is expected to run on a heavily customized version of Android, just like the Kindle Fire.

According to the report, Amazon is working with Foxconn International – the same folks who currently work with Amazon in manufacturing the Kindle and are responsible for manufacturing other popular consumer electronics such as the iPad, iPhone, PlayStation 3 and Xbox 360.

It makes good sense for Amazon to get into the smartphone market. The content that they offer through Amazon.com – movies, books, music, TV shows – is something that only Apple can match with iTunes. As a matter of fact, content offering is one area where the Nexus 7 really falters. All those movies, books, music and TV shows you saw at the Google I/O 2012 keynote? They are for folks in the U.S. only. It will take some serious time before they become available outside, and until then the Kindle Fire is a good option for those of you who like to get their music and movies from a unified online store.

Amazon is expected to announce the Kindle Fire 2 later this year. Speaking purely in terms of hardware, the original Kindle Fire is outdated when compared to the similarly priced Nexus 7. Improving the hardware to match the Nexus 7’s killer specifications and continuing their excellent digital content services will make the next Kindle Fire something to consider when buying your next tablet.

Amazon has declined to comment on the report.

What do our readers think about a smartphone from Amazon? Would you ever buy one?

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