Amazon is once again setting its sights on the smartphone market, more than a decade after the widely-criticized launch and swift demise of the Fire Phone. The fresh effort, internally dubbed “Transformer,” represents a renewed push by the tech giant to integrate its artificial intelligence assistant, Alexa, more deeply into consumers’ daily lives and potentially reshape how people interact with mobile technology. This venture comes as the broader smartphone industry faces a period of uncertainty, with global shipments projected to decline in the coming years.
The project, revealed by four people familiar with the matter, aims to create a mobile device that seamlessly connects with Amazon’s existing ecosystem of products and services – from Prime Video and Music to Amazon.com shopping and voice-controlled home devices. The ambition echoes founder Jeff Bezos’ long-held vision of a ubiquitous, voice-driven computing assistant, reminiscent of the technology depicted in the science fiction series “Star Trek.” The company hopes to leverage its dominance in cloud computing, through Amazon Web Services (AWS) and its established AI foundation with Alexa to gain a foothold in a fiercely competitive market.
A Second Chance at Mobile
Amazon’s previous foray into smartphones, the Fire Phone launched in 2014, was a notable failure. Overseen directly by Bezos, the device boasted unique features like a camera-based shopping tool that could identify products and add them to a user’s Amazon cart. However, the Fire Phone was hampered by a proprietary operating system, Fire OS, which lacked access to the vast app libraries of Android and iOS. It also suffered from hardware issues, including a battery-draining 3D display that caused overheating. Despite being bundled with a free year of Amazon Prime, the phone sold poorly, leading to a $170 million write-down and its eventual cancellation after just 14 months, as The Verge reported at the time.
This time, Amazon appears to be taking a more cautious approach. Sources indicate the company is exploring both a traditional smartphone design and a “dumbphone” – a simpler device with limited functionality – potentially aimed at consumers seeking to reduce screen time. The inspiration for the latter, according to two people involved in the project, is the Light Phone, a minimalist smartphone priced at $700 that focuses on essential features like calling, texting, and navigation. Such a device could also appeal to users looking for a secondary phone, a growing trend among professionals and parents seeking to manage digital boundaries, according to independent wireless analyst Chetan Sharma.
AI at the Core of ‘Transformer’
A key differentiator for the new Amazon phone is its focus on artificial intelligence. The “Transformer” project aims to integrate AI capabilities directly into the device, potentially eliminating the need for traditional app stores. Instead of downloading and registering for individual applications, users could access functionality through AI-powered interactions. Alexa is expected to be a central component, though not necessarily the primary operating system. This strategy aligns with a broader industry trend toward AI-native devices, as seen with OpenAI’s collaboration with former Apple design chief Jony Ive on hardware prototypes and similar efforts by Apple, Google, and Meta, as Reuters detailed.
However, the path forward isn’t without challenges. The recent failures of AI-embedded hardware like the Humane AI Pin and the Rabbit R1 assistant – both of which received poor reviews and, in the case of the Humane Pin, were discontinued – serve as cautionary tales. Francisco Jeronimo, vice president of data and analytics at International Data Corporation, noted in a research note that while Amazon has a strong ecosystem and AI foundation, “the window of opportunity is tiny,” with every major player vying for dominance in the AI-powered device space.
Navigating a Declining Market
Amazon’s re-entry into the smartphone arena also comes at a time of broader industry headwinds. Smartphone shipments are projected to decline significantly in 2026, with IDC forecasting a 13% drop due to rising memory chip prices, as reported by IDC. Apple and Samsung currently control approximately 40% of global smartphone sales, presenting a formidable challenge for any new entrant.
Leading the charge within Amazon is ZeroOne, a year-old group tasked with developing “breakthrough” gadgets. The team is headed by J Allard, a former Microsoft executive known for his work on the Zune music player and Xbox gaming console. Panos Panay, head of Amazon’s devices and services unit, is focused on reversing years of unprofitability in the division, and a forthcoming Android-based tablet, priced around $400, is also in the works.
While Amazon has not yet sought partnerships with wireless carriers, the company is actively developing the “Transformer” phone, with both traditional and minimalist designs under consideration. The timeline for the project remains uncertain, and sources caution that it could be scrapped if Amazon’s strategic priorities shift or financial concerns arise.
Amazon declined to comment on the project. Shares of the company fell 1.6% to $205.37 on Friday, March 22, 2024, and are down 9.3% for the year to date.
The next key development will likely be the launch of Amazon’s new Android-based tablet, which is expected to provide further insight into the company’s evolving strategy in the devices market. Consumers and industry observers alike will be watching closely to see if Amazon can learn from its past mistakes and successfully navigate the challenges of the competitive smartphone landscape.
If you are interested in learning more about Amazon’s devices and services, you can visit their official website: https://www.amazon.com/devices
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