According to the leak which cites several sources close to the file, the next step would be scheduled for 2017. The project would be called internally "ICE", certainly in connection with the Fire Phone. And it will launch one or more phones, depending on the feedback of the partners and the opportunities. These phones are not meant for mature markets, but for emerging countries, notably India and Russia.
This smartphone (or these smartphones) would work on Android like the Fire Phone, but not on the customized version. This will be the standardized version, with all the services of Google, Gmail, and the Play Store included. The size may measure between 5.2 inches and 5.5 inches. This screen would be accompanied by a Qualcomm Snapdragon 435 chipset, 2 GB of RAM, 16 GB of internal storage, a 13-megapixel photo sensor, a fingerprint reader located on the back and Android 7.1.1 Nougat with Google Assistant. The price of the phone would be around 100 USD. Surprisingly, while many manufacturers have developed a personal assistant, Amazon's smartphone will not integrate its in-house application, Alexa.
The fact that Amazon wants to revive itself in the mobile business is not surprising in itself. Many brands believe that being present in the smartphone market provides more visibility to the consumers which is well worth when compared with the losses it generates.
Obviously just like you, we do not have the answer to many questions. First, why focus on India where its products like Fire Tablet, Alexa are not available, where competitive pressure is mounting significantly and where Amazon's competitors (Flipkart, for example) are particularly well established? And India is a market where the rules to sell a smartphone are not very simple. And why use the main branch of Android when Amazon has long been working on its own ROM? Finally, why they offer a mobile without Amazon applications like Amazon AppStore or Alexa? Time will only answer all these questions.