Amazon – a company that was best known for their online marketplace and hosting solutions until two years ago, when the company unveiled the Kindle Fire – is reportedly developing a new smartphone, as well as a competitor to the iPod.

The smartphone supposedly will include a 3D screen as a primary feature, while the iPod competitor will rely on Amazon’s admittedly-great online music streaming service. Both devices would likely follow Amazon’s recent trend of selling hardware at-cost in hopes of making it up later on content sales, which would make both devices very cheap to purchase outright.

One of the devices is a high-end smartphone featuring a screen that allows for 3-D images without glasses, these people said. Using retina-tracking technology, images on the smartphone would seem to float above the screen like a hologram and appear three-dimensional at all angles, they said. Users may be able to navigate through content using just their eyes, two of the people said.

[The Wall Street Journal]

With the full details of the iPad mini now known to the public, Amazon spokesperson Drew Herdener told AllThingsD that “Wednesday was the $199 Kindle Fire HD’s biggest day of sales since launch and up 3x week over week,” and that the company is still very confident in their updated Kindle Fire lineup’s ability to compete with Apple’s smaller iPad.

Given the iPad mini’s relatively high starting price of $329, budget-conscious tablet consumers may indeed look to Amazon’s recently-refreshed Kindle Fire HD lineup, which starts at $199. Amazon’s tablet offerings feature some high-end specs, such as an “HD” display, dual-band WiFi, and a powerful processor. In many ways, the iPad mini and the 7-inch Kindle Fire HD are on equal footing. Apple is relying on its vast library of iOS apps to help push the higher-priced mini over Amazon’s offering. Amazon, in turn, is relying on its subscription “Amazon Prime” service to offset the low price of the Kindle Fire hardware.

For the first time since the second-generation of tablets launched with the iPad, there is serious competition from nearly all sides in nearly all sizes – the holidays should make for an interesting battleground as juggernauts such as Apple, Amazon, and Microsoft make massive moves against each other.

Update: Seeing this hole, Amazon has pounced on Apple – hard. Amazon’s homepage, starting today, displays the following image, which depicts a direct comparison to Apple’s iPad mini. Props to Amazon for not holding back – serious competition, indeed. (more…)

Even as Apple expands their ability to create and manufacture their own mobile chips, Amazon seems to be wanting to do the same for its Kindle (Fire) division.

Reuters reports the following:

If negotiations lead to an agreement, Amazon, which makes tablets and is expected to enter the smartphone industry, would become a direct rival to Apple and Samsung Electronics, which also designs their own chips. The value of any deal will probably be billions of dollars, Calcalist said.

Texas Instruments said last month it will shift its wireless investment focus from products like smartphones to a broader market, including industrial clients such as carmakers, where it is hoping for a more profitable and stable business.

Interesting, particularly considering that Amazon is quickly becoming a consumer electronics manufacturer that can rival Apple, with its Kindle Fire line of devices. Amazon, if this deal went through, would be joining an elite group of corporations – Apple, Samsung, Nvidia, Intel, and Qualcomm being the largest – who have the ability and expertise to create such chips in house. Such an ability is important, particularly to have an edge over the competition.

Texas Instruments’ chips, despite being fairly popular, have historically lagged in performance behind that of Samsung, Nvidia, and Qualcomm (and now Apple, with its in-house A6). Texas Instruments has expressed interest in selling their chip division, which has been struggling.

Tricia Duryee for All Things Digital, referring to the price of Amazon Kindles, writes:

But apparently [Amazon CEO Jeff] Bezos has tired of dancing around the subject, because when the BBC asked on Thursday, he answered: “We sell the hardware at our cost, so it is break-even on the hardware.”

As expected, Amazon sells its Kindle devices at cost. The online retailer sells Kindles to customers at virtually the same price it costs the company to manufacture the devices, instead earning profits from the sale of digital books and other content.

Apple takes an entirely different approach with the iPad, maximizing on sales of the tablet thanks to a generous profit margin. At the same time, Apple still receives its 30 percent cut from iTunes Store, App Store and iBookstore sales. Bezos notes that Amazon’s approach is not necessarily the right approach, but is something the company has been doing since its founding.

[All Things Digital]