Unnamed sources told the pair that Amazon is considering the offer for "its long-planned smartphone." While it has talked to wireless companies about selling the phones through the carriers' channels, Amazon will probably sell the phone on its site. The company doesn't want to make people sign up for a wireless plan contract for the free phone, a requirement wireless companies typically use to encourage customers to renew their contracts in exchange for a free or discounted phone. It's unclear if Amazon would make its smartphone users sign up for something similar to a carrier's plan, like the Amazon Prime program, which wraps free delivery and content services into a yearly subscription.
The company is still figuring out if the free model will work for its hardware partners, according to another unnamed source in the report. Although the smartphone rumor has been circulating for some time now, the latest version includes 3D technology.
Giving away the hardware to lure people into its ecosystem is a classic Amazon move. CEO Jeff Bezos has made this clear with the sale of Kindle tablets -- instead of making money off the hardware, Amazon sells hardware to deliver content.
Update, Sept. 9, 4:30 p.m. PT: An Amazon spokesperson said, "We have no plans to offer a phone this year, and if we were to launch a phone in the future, it would not be free."