Game Informer is claiming that they have sources which say:
Amazon is developing an Android based console for release by the end of this year, most likely by Black Friday.
According to those we spoke with who have knowledge of the in-development hardware, Amazon will be leveraging the titles already available on its platform.
This is one of those rumors that are too hard to quantify. Our gut instinct will tell us its true, but is that because we want it to be true or because it appears to make a lot of sense?
I tend to believe this is true, but I also believe that GI only got half the story. Assuming the rumor is true then this console probably isn't just a console. It's also a set top box which Amazon will use to sell video, mp3, and streaming services.
If Amazon really developed a new gadget to plug into your TV then they would want to use it to sell you all types of content. They wouldn't just leave it as a gaming console; it would be a waste of hardware.
In fact, I would go so far as to say that gaming will be one of the lesser uses. There are a lot of Android games that won't translate well from a 4" smartphone screen to a 40" TV screen. There are also a lot of games that use gameplay motions that are too dependent on a touchscreen to adapt well to a controller.
On a related note, this could also be related to the MediaTek CPU rumor from yesterday. One of MediaTek's specialties is "digital multimedia solutions", which is another name that you could stick on a set top box.
In any case, we won't know more until Amazon decides it is time for another leak.