If Amazon really is working on a smartphone, here’s a few ideas for what it might want to include, says silicon.com editor Steve Ranger.

If Amazon does build a smartphone, it ought to be a phone that geeks will love to hate.

Let me explain. There’s been plenty of speculation about why Amazon would be working on a smartphone, following a research note from Citigroup which claims the books-to-cloud giant is developing an Android smartphone that will launch at the end of next year.

The news has sparked much debate on why Amazon would want to waste its time getting into a commodity market, and one already awash with cheap Android handsets at that. To me, that’s missing the point. A quick look at Amazon’s history illustrates that the company has always had the big prize in mind: leaping from books to retail, to cloud computing and now hardware – and that’s how we need to look at the smartphone rumours.

Amazon Kindle Fire

Amazon’s Kindle Fire has only been out a week and already it’s the most wanted tablet after the iPadPhoto: Amazon

Take Amazon’s recently released Kindle Fire tablet: at $199, it’s very much at the budget end of the market, with specs to match – no camera, no GPS, limited storage. No match for some of the more high-end tablets out there.

Except, of course, that those high-end tablets will sit in stores gathering dust, while the Kindle Fire sells by the truckload.

From a geek point of view that’s not fair – that the most spanking-hot product with the best specs loses out to something less powerful – but that’s because focusing on the specs is ignoring the bigger issue.

Amazon – like Apple – knows consumers don’t really care about specs. Geeks care about specs, and having better, faster processors and the latest operating systems. But ordinary consumers don’t – they care about the practicalities. It’s no good having the best TV with the most fantastic display and a gold-plated remote control, if it can’t pick up any channels.

What makes the Fire so attractive – out only a week and it’s the most wanted tablet after the iPad, according to one report – is the price, and the ecosystem. Thanks to Amazon’s online store replete with digital entertainment, when you buy a Fire, you have a use case built in. When consumers buy a Fire, they already know what to do with it – read books, watch movies – and Amazon can sell you them both.

So if Amazon is working on a phone, then I’d suggest you shouldn’t expect…

…too much innovation in hardware or software. Amazon doesn’t want to play that game – sorry, geeks. In any case, mobile innovation is so rapid that what is considered today’s state of the art will become a low-end phone in a year or two’s time.

So here’s an idea. The Kindle Fire represents the entertainment side of Amazon’s portfolio – consumption of books and movies – and has the screen size to encourage you to do just that.

Sure, a Kindle phone will be able to play music – don’t forget Amazon’s Cloud Player – as well as let you read and watch movies, if you really want to, too, but maybe the real lure of making a Kindle phone is the other side of Amazon’s empire: shopping.

The smartphone is a natural companion when shopping – few people haven’t Googled a product when out shopping to see if they can get it cheaper online, so why not position a Kindle phone as a digital shopping assistant, plugging into the retail side of Amazon’s business?

There are a few obvious ways to make that happen: give the phone NFC and a barcode or QR code reader. Consumers out buying or browsing could just snap the code with their smartphone camera, allowing them to get product information in just a click or two. Suddenly, it’s much easier to read reviews and compare prices online – and then perhaps decide to buy online too.

An Amazon smartphone potentially opens up a big new customer base for Amazon’s e-tail offerings – although the speeds-and-feeds fans won’t be happy.

Want a different point of view? Read silicon.com’s Jo Best on why Amazon shouldn’t get into the smartphone market here.

And what do you think? What would make you buy an Amazon smartphone? Let us know by posting a comment below.