The latest rumors of Apple's iPhone 5 release date suggested that the smartphone will be released earlier than the expected October launch to compete wtih Samsung Galaxy S3, which has begun to roll out in the States this week. 

However, the iPhone 5 may face another fierce competition - this time Amazon's new smartphone.

Amazon is reportedly developing a smartphone that will directly compete with Apple's iPhone and other handheld devices that run on Google's Android operating system.

The rumors of a nicknamed "Amazon Kindle Smartphone" were confirmed when two sources shared with Bloomberg exclusively that Amazon is working Foxconn, the Chinese mobile phone-making company.

Sources also revealed that part of Amazon's smartphone business strategy includes acquiring patents that cover wireless technology. This will also help the e-commerce company defend against future allegations of infringement from competitors.

At press time, Amazon has not come up with a name or release date for the device. Drew Herdener, a spokesman for Amazon, declined to comment.

A smartphone would give Amazon another platform to continue the success off their online business. By offering another low-priced hardware device besides Kindle and Kindle Fire, the company stands to make even more money by allowing their smartphone customers to purchase and download their digital books, songs and movies to the unnamedupcoming handheld wireless device, continued the report. Amazon's Chief Executive Officer Jeff Bezos, who helped Amazon launch tablets including Kindle Fire, now stand to get a share of the wireless hand-held device market presently being dominated by Apple.

There has been speculation that Amazon might enter the smarphone market after the online retailer began selling smartphone apps for Android phones in early 2011 and after Citigroup analyst Mark Mahaney said in November that Amazon is releasing a smartphone. The claim was based on the company meeting with component suppliers in Asia, the report also stated.