Amazon Reconsiders Smartphone Market with 'Transformer' Project

Amazon is developing a new smartphone, codenamed "Transformer," over a decade after its Fire Phone device was discontinued. This latest effort, housed within the company's devices and services unit, aims to create a mobile personalisation device. It intends to sync with the Alexa voice assistant and link to Amazon customers throughout their day.

Credit: AMAZON

The "Transformer" project signifies a new attempt at a long held vision. Founder Jeff Bezos previously envisioned a pervasive voice driven computing assistant, mirroring technology from "Star Trek." His earlier Fire Phone, launched in 2014, centred on shopping. It sought to rival Apple by offering Prime membership shipping benefits and discounts, alongside collecting mobile phone user data, purchase history, and content preferences.

However, the Fire Phone, directly overseen by Bezos, was abandoned in just over a year, becoming one of Amazon's most notable product failures. An Amazon spokesperson declined to comment on the new "Transformer" project. Shares of the company recently fell 1.6 per cent to USD 205.37, marking a 9.3 per cent decline for the year.

A key focus of the "Transformer" project involves integrating artificial intelligence capabilities, according to four individuals familiar with internal company matters who requested anonymity. This AI integration could potentially negate the requirement for traditional app stores, which typically demand users download and register applications. Alexa is expected to be a core feature, though not necessarily the device's primary operating system.

The brief history of hardware with artificial intelligence features includes several unsuccessful ventures. Both the Humane AI pin and the Rabbit R1 assistant aimed to provide generative AI access without computer or mobile phone logins. Both received poor critical reviews, with the Humane pin subsequently discontinued. And this has not deterred other Big Tech companies from pursuing AI native devices that depart from the app driven visual language common in smartphones.

OpenAI is collaborating with former Apple design chief Jony Ive on various hardware prototypes. Apple, Google, and Meta are also actively developing new AI embedded glasses, alongside other wearables such as watches and headphones. Francisco Jeronimo, vice president of data and analytics at International Data Corporation, noted Amazon's opportunity. He cited the company's strong services ecosystem spanning commerce, content, cloud, and its existing AI foundation with Alexa, coupled with extensive data driven customer engagement expertise.

But Jeronimo cautioned that this window of opportunity is narrow. He stated that every major player is moving in the same direction. While Amazon's AWS division leads in global cloud computing infrastructure, the company has faced criticism for being slow in offering AI applications as rivals advanced.

Alexa underwent a multi year AI led revamp before its re launch in 2025. This is considered vital for Amazon's consumer facing services future. The new phone, according to sources reported by Reuters, represents another attempt by Amazon to accelerate customer AI usage, either directly on the device or via Alexa.

The original Fire Phone, launched in 2014, featured a camera based shopping tool that identified products for purchase on Amazon.com. The phone's proprietary Fire OS lacked many popular apps available on Android and iOS. Its complex multi camera screen system for 3D images consumed significant battery, often causing overheating.

Amazon included a free year of Prime with the Fire Phone, yet sales remained poor. The price was cut from USD 649 unlocked to USD 159. The phone was cancelled after 14 months, leading to a USD 170 million charge for unsold inventory.

Colin Sebastian, an analyst at financial firm R.W. Baird, said Amazon's previous smartphone failure does not preclude a new attempt, but warned it would be difficult. He suggested Amazon must provide consumers a compelling reason to switch, given existing app store loyalty.

And Amazon faces the challenging task of competing with market leaders Apple and Samsung, which together held approximately 40 per cent of global sales last year. Furthermore, smartphone shipments are projected to decline by 13 per cent in 2026, the largest ever anticipated fall, due to surging memory chip prices increasing device costs, according to IDC.

The new phone project is being managed by ZeroOne, a group within Amazon's devices unit formed a year ago. Its mandate is to create "breakthrough" gadgets, sources reported. J Allard, a former Microsoft executive involved with devices like the Zune music player and Xbox gaming console, leads ZeroOne.

Panos Panay, head of Amazon's devices and services unit, has been working to reverse years of unprofitability. This includes an upcoming tablet, previously reported by Reuters, which will run Android instead of Fire OS for the first time, potentially selling for about USD 400.

The Transformer project remains under development, according to three involved individuals. The company has explored both traditional smartphone and "dumbphone" options, devices with fewer features, possibly to counter screen addiction. Amazon has not yet sought wireless carrier partners.

One inspiration for the new phone concept has been the Light Phone, according to two sources. This USD 700 minimalist smartphone includes only a camera, map, and calendar, without an app store or web browser.

So, a "dumbphone" could be marketed as a secondary handset, complementing iPhones and Samsung Galaxies already owned by customers. Such handsets, including the Light Phone and flip phones, comprised 15 per cent of global handset sales in 2025, Counterpoint Research reported.

Chetan Sharma, an independent wireless analyst, highlighted the scarcity of data on individuals carrying multiple phones. He noted this practice is most common among white collar workers seeking privacy from employers, or parents providing devices to teenagers to limit social media access.

• Amazon is developing a new smartphone, codenamed "Transformer," focused on AI integration and mobile personalisation.

• The project, within Amazon's devices and services unit, aims to sync with Alexa and potentially eliminate traditional app stores.

• This represents a renewed attempt after the 2014 Fire Phone, a notable product failure overseen by Jeff Bezos.

• The ZeroOne group, led by J Allard, is managing the "Transformer" project, tasked with creating "breakthrough" gadgets.

• Amazon has explored both traditional smartphone and "dumbphone" concepts, with the latter potentially serving as a secondary device.

Source: Reuters