According to the report, in addition to the smartphones, Amazon.com has been developing an audio-only streaming device. The company's Kindle Fire line of tablets have proved successful, though teardowns have shown that the company is making little -- or even losing money -- on each device.
Sources said that the 3D smartphone would use retina-tracking technology to project images that seem to float above the screen, similar to a hologram. The image would appear three-dimensional at all angles. Users may be able to navigate through content with eye movements, two of the people said.
Such an eye-scrolling feature was rumored for the Samsung Galaxy S IV, but it did not appear in the released device.
It's more than just a move into smartphones, though. Development of these projects are taking place at Amazon.com's Lab126 facility in Cupertino, Calif. The projects are dubbed Project A, B, C and D, or collectively the Alphabet Projects.
There is no guarantee that any of the projects will see the light of day. While the company has the goal of releasing at least some of these devices in the coming months, some -- or even all -- of the projects could be shelved due to financial or technical issues.
In mid-2012, the WSJ reported that Amazon.com was already testing a smartphone, with a launch possibly as soon as late 2012 or early 2013. No smartphone has emerged yet, though.
In addition, the smartphone market is crowded, and two big players, Samsung and Apple, dominate the industry. Negotiations with carriers can complicate matters, too, although Amazon.com could go the way that Google does with its Nexus phones, releasing the phone unlocked (although Google has released locked Nexus phones, too).