The device would still operate using Amazon's voice-activated Alexa software, but would have a large screen to make the weather, news and other items easily accessible. The screen will be able to tilt upwards and packs better speakers than the current Echo models, according to Bloomberg.
The new Echo device is expected to be pricier than the Dot, Tap and Echo speakers, which go for $50, $130 and $150, respectively. The new device will use a version of the Fire OS, the software that runs Amazon's Fire tablets and Fire TV set-top box, the sources said, according to Bloomberg.
A touch-based device might seem like somewhat of a step backward, however, with all the buzz around voice activated technology, said Werner Goertz, an analyst at market research firm Gartner. Plus, Amazon's Alexa software isn't exactly a "match made in heaven" for its Fire OS, Goertz noted.
The Fire OS is currently optimized for use on its Fire HD8 tablet, which makes it operate somewhat clumsily since the HD8 is on par with most e-readers, Goertz said.
That said, a touchscreen voice assistant would help with tasks that require more complex processes, such as ordering a plane ticket.
"If you think of a tablet that provides a use-case where multiple options are given, tactile would add to that," Goertz noted. "Voice is not as good at that."
Amazon has made a big bet on voice assistant technology and its been largely well-received among consumers, with estimates of 5.1 million Echo sales since the device's limited release in 2014, according to a Nov. 21 Consumer Intelligence Research Partners report.
Reports of Amazon exploring a tablet-like digital assistant first surfaced earlier this year when the company was said to be developing an Alexa-powered device known as "Knight," according to the Wall Street Journal.
There's no guarantee that Amazon will publicly release the device, but if it does, Amazon would carve out a greater segment of the growing digital assistant market.
The Seattle-based e-commerce giant has been waging a war over connected home gadgets with rivals Apple (AAPL) and Alphabet's (GOOGL) Google unit. Google released Google Home late last month and Apple is believed to be prototyping an Echo-like device based on its Siri voice assistant.
Alexa has the benefit over rivals in that it supports a wide array of third-party apps and services, said TheStreet's technology columnist Eric Jhonsa.
But while Amazon's Alexa has a growing list of available skills, Google and Apple could enter the voice assistant market in places where Amazon has a limited reach, such as in automobiles or in offices.
Google, in particular, could integrate a touchscreen digital assistant in self-driving cars, Goertz added. Amazon, meanwhile, has yet to announce any major plans in the automobile market.