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Amazon Inc., the world’s largest online store, is developing an Android-smartphone under its own brand, reported Bloomberg News on Friday, citing two anonymous sources familiar with the plans of the company.

Amazon since last fall is selling tablets Kindle Fire, running mobile platform Android, at prices starting from $ 200. As per the company, Kindle Fire is being sold at a price which is a few dollars less than its cost, but retailer maintains that it can cover the losses incurred from the sales of devices and even make profit by selling digital content from its online store which is accessble directly from Kindle Fire.

By developing a smartphone, the company expects to use the same business model and further increase the sales of books, movies and music through its online retail store, according to Bloomberg.

Amazon spokesperson has declined to comment about the company’s plans on mobile phones.

According to sources of Bloomberg, Amazon is now actively buying patents in wireless communications technologies to protect its devices from any potential legal attacks of competitors, as well as it is in negotiations with the Taiwanese consumer electronics assembly firm Foxconn, which will manufacture the device. Bloomberg has not mentioned anything about its specs or any approximate release date.

According to analyst firm IDC, the market for smartphones in the first quarter of 2012 totaled 398.4 million units. As of today, Samsung is the market leader in this segment, and its main competitor is Apple Inc., manufacturer of iPhone.