Clash of Billions They got burned once: Amazon is now working on a new AI phone to fight the iPhone

Project “Transformer” and Bezos’ old ambition

According to a report published by Reuters, the project known internally as “Transformer” represents Amazon’s modern attempt to develop a smartphone with a voice assistant at its center. It is being developed within Amazon’s experimental group “ZeroOne”, and the project is headed by J Allard, a Microsoft veteran known for his work on the Xbox console and the Zune device. The entire division is overseen by Panos Panay, whose task it is to reorient the hardware division towards profitability and deeper integration of artificial intelligence. Although he foundedč and Chairman Jeff Bezos is no longer in the position of CEO, the initiative reportedly stems from his old ambitions to compete with Apple in the smartphone arena.

This initiative represents a new chapter in a long-standing effort to bring to market Bezos’ vision of a ubiquitous, voice-controlled computer assistant, similar to the computer from the sci-fi series “Star Trek.” Bezos once envisioned a smartphone či srž shopping and could compete with Apple by offering shipping benefits and discounts through Prime membership, and along the way Amazon would collect a huge amount of new customer data.

Alexa+ as a key advantage

While the previous failure, Fire Phone, is remembered for the disastrous commercial result that cost the company a write-off of 170 million dollars and “gymnastic” features such as a 3D interface that follows the movements of the head, the new device relies entirely on the power of artificial intelligence. At the heart of the experience is Alexa+, Amazon’s next-generation generative AI assistant. Launched in beta in March 2025, and widely available in the US from February 2026, Alexa+ has “agent” capabilities, which means it can independently perform complex tasks such as reserving a table at a restaurant or finding and engaging service providers.

According to the idea, the new phone’s personalization features would make shopping on Amazon, watching Prime Video, listening to Prime Music or ordering food easier than ever before. Insiders suggest the phone could use artificial intelligence to perform tasks directly, potentially eliminating the need for a traditional app store – which was one of the key obstacles that contributed to the original Fire Phone’s demise. The device is also expected to use new AI-optimized chips like the AZ3 and AZ3 Pro, which Amazon has already announced. presented in its new Echo devices.

Two possible directions in an unstable market

The project is still in its early stages, and Amazon is reportedly exploring two different paths. One is a traditional smartphone designed to compete directly with the iPhone and Samsung Galaxy series. The second is a minimalist “dumb phone”, inspired by devices like the Light Phone, intended for users who want to reduce their dependence on screens, and could be sold as a secondary, “companion” device. This second direction coincides with the growing global trend of “digital detox”, with minimalist mobile phones and flip phones accounting for approximately 15 percent of global sales in 2025.

Amazon’s move comes at a time when competitors are also intensifying their efforts to develop AI hardware. Apple is preparing for improved Siri capabilities, Google is deeply integrating Gemini into Android, and there are even rumors that OpenAI is collaborating with former Apple designer Jony Ive on its own hardware. At the same time, the smartphone market is facing a decline, with IDC predicting a 13 percent drop in global shipments in 2026 due to rising component prices.