Amazon Explores AI Smartphone After Fire Phone Setback

Key Moments

Amazon Returns to Smartphones

In 2014, Amazon launched the Fire Phone to compete with Apple and Samsung. Overseen by Jeff Bezos, it lasted just over a year before being discontinued. The device became one of Amazon’s most public missteps.

Now, Amazon is working on a new phone, according to sources familiar with the project. Called “Transformer,” it will be housed within the devices and services group. The phone is designed as a highly personalized device integrating Alexa. Amazon hopes it will provide a persistent channel to reach customers throughout the day.

This project continues Bezos’ vision of a pervasive, voice-first computing assistant, inspired by the “Star Trek” voice-controlled computer.

Bezos’ Vision and New Ambitions

Bezos previously envisioned a phone centered on shopping. By using Prime benefits and discounts, the device could differentiate itself from Apple. It could also give Amazon insights into user behavior by combining mobile data with purchase history and content usage.

Details like pricing, revenue targets, and financial commitment remain unclear. The project could be halted if corporate strategy shifts or finances tighten. Amazon has not commented publicly.

AI Features and App Integration

Transformer’s main focus is integrating AI to enhance the user experience. This may reduce or remove the need for conventional app stores. Alexa will be a key element, though it may not serve as the phone’s operating system.

AI-native hardware has faced challenges. Devices like the Humane AI pin and Rabbit R1 failed after poor reviews. Still, development continues. Apple, Google, Meta, and OpenAI are exploring AI-embedded hardware such as watches, glasses, and headphones.

Amazon aims to move beyond its image of being slow with AI. Alexa recently received an AI-focused upgrade. Transformer is seen as a way to boost on-device AI use and integrate it with Alexa services.

Enhancing the Customer Experience

The new phone is intended to make it easier for customers to use Amazon services. This includes shopping on Amazon.com, streaming Prime Video, listening to Prime Music, and ordering food from partners like Grubhub.

Lessons From the Fire Phone

The Fire Phone had a camera-based shopping function, but its Fire OS lacked many popular apps. The complex multi-camera setup created 3D effects but drained battery and caused overheating. Amazon bundled the device with a one-year Prime membership, but sales were weak. The unlocked price dropped from $649 to $159, and Amazon took a $170 million charge after discontinuation.

Analyst Colin Sebastian said past failure does not prevent success this time, but Amazon must give consumers a compelling reason to switch.

Competitive and Market Challenges

Amazon faces strong incumbents. Apple and Samsung held about 40% of global smartphone sales last year. Smartphone shipments may drop 13% in 2026 due to higher memory chip costs.

ZeroOne: Driving Breakthrough Devices

ZeroOne, a group within Amazon’s devices unit, leads Transformer. Headed by J Allard, formerly of Microsoft, the group focuses on “breakthrough” hardware. Panos Panay, head of Amazon devices and services, also oversees the project. He plans an Android tablet priced around $400, replacing Fire OS for the first time.

Device Options Under Review

Amazon is considering both a full smartphone and a simpler “dumbphone” to address screen overuse. Carrier discussions have not yet started. The simpler phone may serve as a secondary device alongside existing iPhones and Samsung Galaxy devices.

Potential Demand for Secondary Devices

Multiple-device ownership is common among white-collar workers and parents buying phones for teenagers. Lightweight phones could appeal to these groups, offering restricted features and simplified use.

Project Snapshot