More than a decade after the costly Fire Phone flop, which cost the company a $170 million write-down, Amazon is preparing to hit the mobile market again. Codenamed ‘Transformer’, the project, being developed inside the elite ZeroOne unit led by Microsoft veteran J Allard, is set to be more than just another smartphone.
This is an attempt to create a physical interface for a new, generative AI-based version of Alexa.
For years, Jeff Bezos’ strategy was based on a vision of an omnipresent assistant. However, while the Echo dominates home desktops, outside of the Wi-Fi range Amazon remains reliant on Apple and Google operating systems. “Transformer” is set to change that, becoming a mobile personalisation hub.
According to sources close to the project, the device could do away with the traditional app shop model in favour of native integration of services such as Prime Video, Music and Grubhub, controlled directly by AI.
The “second phone” strategy
Amazon seems to be learning lessons from the past. Instead of a direct clash with the iPhone, the company is considering the concept of a ‘dumbphone’ or a minimalist device inspired by the niche Light Phone. Such a move would position the product as a ‘second phone’ – a digital detox tool that still offers access to the shopping and logistics giant’s ecosystem.
Counterpoint Research data indicates that feature phones will account for 15% of global sales in 2025, opening up a new avenue for Amazon to reach digitally savvy customers.
A risky window of opportunity
However, the market situation is difficult. The company’s shares have suffered a near ten per cent year-over-year decline, and IDC forecasts a record 13 per cent drop in smartphone shipments in 2026 due to rising component costs. Amazon also has to compete with the new wave of hardware AI, such as Jony Ive’s and OpenAI’s projects, which are trying to define the post-application era.
For Panos Panay, head of devices, ‘Transformer’ is a test of the viability of a unit that has struggled for years with a lack of profit. If the project survives the prototyping phase, it could become the most important link between Amazon’s shopping data and users’ daily activity in the real world.
