Is Amazon coming up with a smartphone?

There are several rumors circulating that Amazon is developing their own smartphone. The plan is to run the Google Android OS. I'm guessing that the Amazon smartphone will run a limited version of Android (similar to the Amazon Kindle Fire).

Does Amazon have the right type of ecosystem? I think they could put some serious pressure on Apple. I mainly use the Amazon Kindle app and I like how I can synchronize all my books across my Android and iOS mobile devices.

So, how will the Amazon smartphone be different from other Google Android smartphones? For one thing, the Amazon Appstore provides nice features for devoted Amazon customers. Did you notice how they give away a free paid app each day?