Late last year rumors pointed at the possibility that Amazon was considering entering the smartphone market with the aim to release a handset in time for Christmas 2012. At the time the e-retailer was linked with Chinese manufacturing giant Foxconn with sources even revealing it would likely be powered by a Texas Instruments OMAP 4 processor.

Now, more rumors have surfaced thanks to two sources with knowledge of the matter talking to Bloomberg.

The two sources, who asked not to be identified because the plans are private, said work is underway with Foxconn and that the online-retailer is seeking to complement its smartphone strategy by acquiring patents that cover wireless technology in case its subjected to allegations of patent infringement.

The news follow the recent hiring by Amazon of Matt Gordon, formerly director of acquisitions at Intellectual Ventures Management LLC, which owns more than 35,000 IP assets. He will take his place at the retailing giant as general manager of patent acquisitions and investments.

A smartphone makes sense, as it would give Amazon a wider portfolio of low-priced hardware devices to further bolster its income strategy with digital books, music and movies. Amazon will also be keen to carve out its own slice of the market currently dominated by Apple's iPhone and handsets running Google's Android mobile OS in an industry with shipments expected to increase to a staggering 1.6 billion units by 2016.

Amazon did not respond to requests for further comment on the rumors.