More than a decade after one of Silicon Valley’s most notorious hardware disasters, Amazon is quietly working to re-enter the smartphone market. The company is developing a new device internally codenamed “Transformer,” according to people familiar with the project, and this time, artificial intelligence is at the center of the vision, according to a report from Reuters.
The effort is being developed within Amazon’s devices and services unit, with the phone envisioned as a mobile personalization device that can sync with the Alexa voice assistant and serve as a continuous touchpoint between Amazon and its customers throughout the day. Rather than competing head-to-head with Apple and Samsung on conventional smartphone terms, the device is conceived as a personalization interface designed to keep consumers tied to Amazon’s ecosystem of services, and may rely on AI to reduce or even replace traditional apps entirely.
The project is being led by a year-old group within Amazon’s devices unit called ZeroOne, whose mandate is to create breakthrough gadgets. ZeroOne is led by J Allard, a former Microsoft executive who was involved in developing the Zune music player and the Xbox gaming console. The broader devices and services division is headed by Panos Panay, who has been working to reverse years of financial losses in the unit.
The concept draws inspiration from the Light Phone, a minimalist $700 handset offering only basic functions such as a camera, maps, and a calendar, without an app store or web browser. Amazon is reportedly exploring two possible directions for the Transformer: a standard smartphone or a simpler “dumbphone” possibly used as a secondary device, though key details like price, timeline, and launch remain unclear. The company has not yet approached wireless carriers about the project, and insiders caution that it could still be shelved.
The stakes are significant given Amazon’s history in this space. The Fire Phone, Amazon’s first and only smartphone attempt, launched in 2014 with a camera-based shopping tool and a proprietary operating system that lacked the popular apps found on Android and iOS. It also featured a complicated multi-camera system for 3D images that drained the battery and caused the handset to frequently overheat. Fewer than 35,000 units were sold in the first two months after launch. Within weeks, the price dropped from $650 to 99 cents as Amazon scrambled to clear shelves. The company ultimately canceled the Fire Phone after 14 months, taking a $170 million charge for unsold inventory.
The Transformer project represents a very different philosophy. A key focus has been integrating AI capabilities into the device in a way that could eliminate the need for traditional app stores, which require downloading and registering for applications before they can be used. Alexa would likely be a core feature but not necessarily the primary operating system.
Amazon has reasons for optimism on the AI side. Alexa+, the upgraded version of the assistant launched in March 2025, attracted tens of millions of sign-ups within its first nine months and generated engagement rates two to three times higher than the original version. At CES 2026, Amazon showcased new AI-enhanced products, including the Echo Dot Max and a refreshed Echo Studio, and expanded the assistant’s reach into BMW vehicles while launching a web-based version accessible outside Amazon’s own hardware.
But the broader landscape remains daunting. Global smartphone shipments are headed for their biggest decline ever in 2026, expected to plunge 13%, according to International Data Corporation, as surging memory chip prices drive up device costs. Apple commanded 31.5% of global smartphone shipments as of early 2026, and Samsung held 21.4%, meaning the two leaders together accounted for more than half the market.
Amazon also has the sobering example of other AI-native hardware attempts to contend with. The Humane AI Pin and the Rabbit R1 both sought to make generative AI available without the need to log into conventional phones or computers. Following poor critical receptions, both gadgets were discontinued. That hasn’t stopped the broader industry from pushing forward — OpenAI is working with former Apple design chief Jony Ive on several hardware prototypes, while Apple, Google, and Meta are developing new AI-embedded glasses and other wearable devices.
For Amazon, the Transformer is more than a product bet — it is an extension of a long-held ambition. The initiative is the newest chapter in a years-long effort to realize founder Jeff Bezos’ vision of a ubiquitous, voice-driven computing assistant reminiscent of the voice-controlled computer in the science fiction series Star Trek. Whether the company can finally translate that vision into a device consumers actually want remains, for now, an open question.
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