Amazon is making a move that would have seemed unthinkable just months ago: developing a new smartphone. Nearly 12 years after the Fire Phone catastrophe, the company is pursuing what Reuters describes as a smartphone project code-named Transformer, centred entirely on its Alexa voice assistant.
According to reporting from The Verge, the device is being developed within Amazon's ZeroOne group, led by J Allard, a veteran who previously worked on the Zune media player and Xbox at Microsoft. The team has reportedly explored both smartphone and dumbphone designs, taking cues from the Light Phone, a minimalist device that costs around $700 and features only a black-and-white display with no app store.
The strategy appears deliberately different from Amazon's last smartphone venture. Rather than relying on a full app store, Transformer may instead use mini applications similar to those available through ChatGPT, potentially avoiding the developer friction that plagued the Fire Phone. The device is not designed to be an iPhone competitor; Alexa won't necessarily be the primary operating system but rather the central point of interaction.
Learning from failure
The Fire Phone's fate offers a sobering lesson in product strategy. In October 2014, Amazon reported a $170 million write off relating to the Fire Phone, which included the disposal of $83 million of unsold inventory worldwide. The app store lacked Google's flagship apps, leaving Fire Phone owners without easy access to Gmail, YouTube or Google Maps. The high price didn't help incentivise iPhone and Galaxy owners to abandon their devices, which is what Amazon needed for the Fire Phone to gain quick traction.
Around the same time the Fire Phone was being developed, Amazon was working on a smart speaker project, Echo, powered by voice assistant Alexa. When the phone failed, they took their learnings to accelerate Echo development. Today, Echo makes up 70 per cent of the smart speaker market.
Alexa's credibility challenge
Amazon's timing for a new smartphone is complicated by significant customer frustration with Alexa Plus, its new AI-powered upgrade. One user reported being "flooded by ads" after reverting to the original assistant, forcing them to switch back to Alexa Plus. Other complaints include slow response times, too many ads, and the style of the new voices. Echo devices suddenly upgraded to Alexa Plus with zero prompt or permission from the user.
There is no confirmed timeline for Transformer's release, and there remains genuine uncertainty about whether Amazon will ever launch it. The company has been aggressive in pursuing AI competitiveness in recent years, and the smartphone could be part of that broader push. However, without a clear competitive advantage or distinct use case, the project faces the same fundamental question that doomed the Fire Phone: what does Amazon offer that customers cannot get from existing devices?