According to a new Bloomberg report, citing unnamed sources `in the know' of the proceedings at Amazon, the online retail giant is readying a smartphone which will take on the Apple iPhone as well as the Google Android-based handsets.

As per the information shared by the Bloomberg sources, Amazon is developing its own smartphone in collaboration with hardware maker - and Apple's long-time manufacturing partner - Foxconn.

In addition to its preparations for venturing into the smartphone arena with its own smartphone, Amazon is also apparently strengthening its portfolio of patents pertaining to wireless technologies, in an evident attempt to keep any potential legal scuffles at bay.

The rumors of an Amazon-branded smartphone have been making rounds for quite some time now, with some last-year reports claiming that the online retailer and Foxconn already working on a device.

In fact, Citigroup analysts had hinted in November 2011 that Amazon and Foxconn were working on the creation of a smartphone, which would likely hit the markets in the fourth quarter this year.

Noting that Amazon's launch of a smartphone would not be a surprising move at all, and that it was just a matter of time before a Kindle smartphone emerges on the smartphone market, CNET executive editor David Carnoy said: "Ultimately, Jeff Bezos knows that his company is going to have to compete directly against the iPhone if he wants Amazon to be Apple -- or even beat it."