Retailer Has Plans to Announce Phone by June, Begin Shipping by End of September

Updated April 11, 2014 5:42 p.m. ET

Amazon.com Inc. is preparing to release a smartphone in the second half of this year, according to people briefed on the company's plans, part of a broad push into hardware that would pit it against Apple Inc. and Samsung Electronics Co.

The retailer has been demonstrating versions of the handset to developers in San Francisco and its hometown Seattle in recent weeks, these people said. People briefed on the company's plans have been told that Amazon aims to announce the phone by the end of June and begin shipping phones by the end of September, ahead of the holiday shopping season.

The people said Amazon hopes to distinguish its phone in a crowded market with a screen capable of displaying seemingly three-dimensional images without special glasses, these people said. They said the phone would employ retina-tracking technology embedded in four front-facing cameras, or sensors, to make some images appear to be 3-D, similar to a hologram, the people said.

An Amazon spokesman declined to comment.

The phone would thrust Amazon into a competitive market with entrenched players that has nearly felled once high-flying device makers like BlackBerry Ltd. and Motorola. With Apple and Samsung alone commanding 49% of the worldwide smartphone market, according to market researcher IDC, there is little room for upstarts.

News of the phone comes as Amazon moves more deeply into designing and making hardware. Last week, it unveiled its Fire TV set-top box and said it will soon begin distributing a wand customers can use to scan product barcodes at home to re-order groceries and other goods without logging into their computers. It introduced new versions of its Kindle Fire tablets last year.

But Amazon approaches hardware differently than many other companies. Chief Executive Jeff Bezos has said he prefers Amazon to profit from customers buying services through Amazon hardware, rather than profit from the devices themselves.

The design and pricing of the smartphone are unclear and these people cautioned that Amazon may alter its launch plans due to performance or other concerns.

The 3-D screen technology can sense the movement of a person's eyes and whether the screen is moving closer to a user's face, according to people familiar with the matter. In response, the phone will be able to automatically zoom into images as it moves closer to a user's face and could manipulate text and images as a person moves the phone.

The technology would be ideal for gaming, an area of recent focus for Amazon including on the set-top box. The phone's software is also optimized for very visual games, designed to provide a sense of depth, according to people who have handled the handsets.

It also isn't known what operating system the phone will use or which wireless carriers Amazon is working with. The Kindle Fire tablet and the Fire TV set-top box both rely on Google Inc.'s Android mobile-operating system. But Amazon created its own app store for the Kindle devices and does not offer access to Google's Play Store.

AT&T Inc. provides service for Kindle tablets and e-readers. An AT&T spokesman declined to comment.

Amazon has told one of its suppliers it is anticipating mass production of the device later this month, with an initial order of 600,000 units, according to a person briefed on the plans. The company has lined up two display makers for the smartphone, including Japan Display Inc., the maker of displays for Apple's iPhone 5C and 5S, according to another person familiar with the details.

A Japan Display representative declined to comment.

Amazon has been inviting select app and software developers to hotels to demonstrate the handset in suites protected by security guards, two people familiar with the matter said.

Because consumers carry smartphones with them everywhere, Amazon would gain access to data like users' locations and app downloads, which could help generate new sales opportunities for e-books, video downloads and items like household goods.

A smartphone may also open up new avenues for mobile payments, a nascent market dominated today by rival eBay Inc.'s PayPal. Amazon is targeting a summer launch of a program to use Kindle Fire tablets as checkout registers at smaller brick-and-mortar merchants, people familiar with the plan told The Wall Street Journal earlier this year.

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