Sources told The Verge that the set-top box will run a forked version of Android, just like the Amazon Kindle Fire HD. This would let Amazon customise the UI, and give its shopfront pride of place as the destination for all your TV and movie needs.
Also, buoyed by Sky's Now TV box, Amazon would surely offer the set-top box at a very affordable price. Amazon makes little or no profit on its tablets, preferring to earn its cash from the movies, ebooks and TV shows we buy to enjoy on them. It's a successful business model that's seen Amazon undercut most other Android tablet makers.
The set-top box is also thought to run third-party apps.
It's being developed at Amazon's Lab126 facilities, which is also where the company is thought to be working on its smart phone. Last week a report claimed HTC was working with Amazon on the handset, just like LG does with Google for the Nexus 4.
Apple is rumoured to be working on its own TV set, so Amazon obviously wants to stop the Cupertino company becoming too dominant in the lounge.
Source: The Verge