It is not to far fetch to think that Amazon will build a phone. So two different sources are reporting that Amazon and HTC are already in talks to produce a rumored line of smartphones.

The news is significant because it means that Amazon would be sourcing its hardware from a third party manufacturer for the first time. Teaming up with Amazon could also save HTC from hemorrhaging any more money.

Jessica Lessin says that Amazon has an incentive to team up with HTC. Amazon's Kindle ereaders and tablets have always been primarily Wi-Fi devices. HTC has existing relationships with carriers that could not only help get the phone picked up—but could also provide a huge network of retail outlets if they want to move more units.

HTC has spent the last few years making seriously hot hardware. Could this be one huge bet that could pay off?

For now, Amazon has already said it wasn't going to release a phone in 2013, but the sentiment might not be the same for next year. Can co-branded phones work?

[FT and Jessica Lessin]