Amazon rumored to be working on a phone — but is that wise?

Surprise surprise. Shortly after Amazon’s Kindle Fire tablet started shipping, the company is rumored to be working on a phone for 2012.

Citigroup analyst Mark Mahaney lays out the case for the Amazon phone in his latest report,  AllThingsD reports.

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“Based on our supply chain check, we believe FIH [Foxconn International Holdings] is now jointly developing the phone with Amazon,” Mahaney wrote. Foxconn, it should be noted, is also the premiere device manufacturer for Apple’s mobile devices.

An Amazon phone makes sense for many reasons, especially after the company showed off its ability to tweak Android to its own purposes with the Kindle Fire. It would be another way for Amazon to promote its content ecosystem, and the company is big enough to do something truly innovative in the way cellphone service is offered in the US.

Still, I can’t help but express trepidation about the news. Will Amazon really be able to stand out in the glut of Android phones on the market? And is it wise for the company to offer a phone, which would be a big departure from its more consumption-focused e-readers and tablet?

It made more sense for Amazon to get into tablets: Other than the iPad, no other tablet has truly been successful with consumers (except for perhaps Barnes & Nobles’ Nook Color). The market was wide open for Amazon to step in and offer something inexpensive and easy to use. Android tablets, while increasingly thinner and more powerful, are still weighed down by the platform’s nascent tablet interface and lack of apps optimized for big screens.

With the Kindle Fire, Amazon offered a better Android tablet interface, and it’s already sparking interest from developers. Android needed a standout tablet to convince developers to build slate apps, and it looks like the Kindle Fire will accomplish just that.

When it comes to Android phones, Amazon has less to offer consumers. There are already cheap Android handsets on the market, and while Amazon’s Kindle Fire user interface is well-suited to a tablet, it wouldn’t work as well on a phone. If anything, creating a phone would likely be more for Amazon’s benefit than for consumers’. That doesn’t seem like Amazon’s style, especially when it would be better served to focus on delivering improved mobile shopping experiences for all mobile platforms.