According to the report, the Internet retail giant will use Google‘s (GOOG) Android operating system to run the new console, which could make its debut by Black Friday, traditionally the kickoff to the annual Christmas shopping frenzy.
The new console is reported to come with a dedicated controller and will likely play games already developed for the Android platform.
Any new gaming console would have to compete with Sony‘s (SNE) Playstation and Microsoft‘s (MSFT) Xbox. Amazon could leverage its market position by undercutting the price of market leading consoles as it did with its Kindle Fire tablets, which run on a modified version of Android.
Microsoft’s upcoming Xbox One console was hit with criticism after it was priced at $499, significantly more than the current Xbox 360 console.
Amazon has also long been rumored to be working on a smartphone of its own.
Shares of Amazon climbed about 1% on Friday midday trading.