Citigroup's research department reports that Amazon will introduce a smartphone in Q4 2012. This will push Amazon futher into the mobile market. The phone will go for an estimated $150-$170. Sources say it will run Android, but Amazon will still have to pay an "OS royalty" to Microsoft, which "claims that more than half of Android devices are subject to patenting licensing agreements," according to ArsTechnica.

Citigroup analysts Mark Mahaney and Kevin Chang told Reuters that this seems the next move for Amazon:

"With the clear success of the Kindle e-Reader over the past 3 years, and Kindle Fire possibly succeeding in the low-priced Tablet market, we view this as the next logical step for Amazon. We continue to believe Amazon has now set its eyes on the Mobile (and Tablet) Media and Product."

Just earlier this week, Amazon started shipping its Kindle Fire tablet, the device that officially catapulted the retail giant into the tablet wars. The Kindle Fire tablet is primed for media consumption, offering users access to the Amazon Appstore for Android, Amazon MP3 storefronts, Instant Video and the Kindle e-book catalog. It also runs its own browser, Amazon Silk. Developers have already started building apps specifically for Kindle Fire.

Is entering the smartphone market a good move for Amazon? Tell us what you think in the comments.