More than a decade after one of the technology industry's most notorious hardware disasters, Amazon is quietly working to re-enter the smartphone market. According to reports, the company is developing a device internally codenamed "Transformer," and this time artificial intelligence sits at the core of the vision.
The smartphone is being developed by a relatively new unit within the Devices division called ZeroOne, which is led by J Allard, a former Microsoft executive who helped create the Xbox. According to Reuters' sources, Alexa functionality would be a core part of the experience, but Amazon wouldn't necessarily build a custom OS around its voice assistant. The phone would make buying products on Amazon and using services like Prime Music and Prime Video "easier than ever," and may bypass traditional app stores.
The contrast with Amazon's 2014 Fire Phone could hardly be sharper. Amazon was forced to take a $170 million writedown charge on costs related to the device. Meanwhile, the company reportedly has $83 million worth of unsold Fire Phones still in its inventory. The Fire Phone's fundamental problem was that consumers saw it as a shopping device first and a smartphone second. Customers didn't want their phones being turned into portable, sales machines. While some of these technologies live on in other forms today, they were not things customers wanted in a phone.
Amazon's designers took lessons from that catastrophe when conceived the Transformer. 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. The project is still in development and could take different forms, including a standard smartphone or a "dumbphone," possibly used as a secondary device.
Yet Amazon faces significant headwinds. 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. As of February 2026, Apple commanded 31.5% of global smartphone shipments, and Samsung held 21.4%, meaning the two leaders together accounted for 53% of the market. Breaking into a market dominated by two entrenched players, while shipments contract, is a calculated risk.
There is a genuine reason for Amazon to make this bet. 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. The phone is seen as a potential mobile personalization device that can sync with home voice assistant Alexa and serve as a conduit to Amazon customers throughout the day.
Still, other AI-native hardware attempts have failed spectacularly. 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. Transformer's success will hinge on whether it offers genuine daily utility rather than novelty.
Amazon has not disclosed a timeline, pricing, or how much money it has committed to the project. The smartphone effort could be scrapped, the report said. That said, the company has yet to approach wireless carrier partners for the device. The project remains in early stages, and whether Amazon has truly learned from the Fire Phone's mistakes remains an open question.