The lucrative smartphone market appears to be drawing interest from both Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). According to DigiTimes, Foxconn (FXCNY.PK) received handset orders from both companies for devices scheduled to be launched in mid-2013.

Smartphone Rumors

DigiTimes is not the only source reporting that Microsoft and Amazon may expand their business operations to include smartphones.

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The Wall Street Journal reported on November 2 that Microsoft was working with component suppliers in Asia as a means to be more competitive with Apple (NASDAQ:AAPL). The publication stated that the move “suggests the computer-software giant is increasingly adopting a variation of a business model favored by rival Apple, which designs computers and phones along with the software that powers them.” The computer software manufacturer has already begun producing Microsoft-made hardware with the launch of its Surface Tablet.

Plan B” in the event that its Windows Phone 8, which powers smartphones from Samsung (SSNLF.PK), Nokia (NYSE:NOK), and HTC (HTCKF.PK), fail to do well. While Nokia’s Windows models are sold out at U.S. retailers, the company’s initial shipment volumes to retailers are still unknown.

When Microsoft’s Chief Executive Steve Ballmer was asked about the company’s smartphone plans by the Journal, his reply was ambiguous. “We’re quite happy this holiday [season] going to market hard with Nokia, Samsung and HTC,” he said. “Whether we had a plan to do something different or we didn’t have a plan I wouldn’t comment in any dimension.”

As for Amazon, Citigroup analyst Kevin Chang stated in a research note from earlier this month that the Internet retailer is set to “launch a smartphone based on QCOM 8960 Pro (better processor than Samsung uses in its LTE Galaxy S3) at below $300 in June 2013.”

CHEAT SHEET Analysis: Is This an Industry Trend?

One of the core components of our CHEAT SHEET Investing Framework explains that companies riding macro trends tend to outperform those that don’t. Think of the investing proverb, “A rising tide raises all boats.” In this case, the trend is obvious; smartphone sales are on the rise and PC sales are on the decline. Yang predicts that smartphone sales will rise to 738 million units this year, up from 481 million last year.

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