It's unclear what kind of device exactly the company is looking to develop. Some of the newly-hired people will most likely work on the next versions of the Kindle, possibly integrating touch screens or perhaps a full color display. But the report also notes that Amazon is looking to create more devices that could "enable simple purchasing of Amazon content, including its digital books, music and movie rentals and purchases."
An Android-based Amazon phone seems a bit unlikely, though the possibility hasn't been ruled out altogether, while a portable media player would appear to be a natural fit for the company, but that market is already shrinking with the sheer number of iPods and other MP3 devices out there, not to mention smartphones are capable of doubling as a music player. Tablets, on the other hand, seem to be the next big thing in hardware these days, so I wouldn't be surprised to see them taking that route with a device centered on its e-book, music and video services -- if not their entire store.