Recent leaks point to Amazon gearing up for a return to smartphones with an AI-focused device. However, analysts aren’t convinced the timing makes sense.
According to a new report, industry experts believe this could be “the worst possible time” for Amazon to re-enter the smartphone market, even after adding AI into the mix.
Why an Amazon AI phone doesn’t make sense right now
One of the biggest concerns outlined by the report is the broader state of the smartphone industry. Due to the rising cost of components and the ongoing memory shortage, the market is expected to fall by around 13% in 2026. So Amazon wouldn’t just be entering a competitive space; it would also be entering a market that’s in decline.
But how does one compete with Samsung and Apple?
This isn’t ideal for Amazon, which is trying to make a comeback after its Fire Phone failure back in 2014. Amazon has already bet big on artificial intelligence, and the AI experience might be solid. But competition remains another major hurdle to its success. The original Fire Phone struggled for a number of reasons, including the broader ecosystems and polish from veteran smartphone makers.
So AI alone might not be enough.
Amazon’s rumoured device, which is reportedly codenamed “Transformer”, is expected to lean heavily on AI. It will likely integrate Alexa and aim to reduce reliance on traditional apps. This sounds cutting-edge in theory, setting it apart from the crowd. But this isn’t the time we’ve seen an AI-first product, which has struggled to gain popularity. These devices end up feeling more like experiments than essentials.
There are claims that Amazon is building a more minimalist or “secondary” phone. While demand for simpler devices does exist, analysts say that the market is too small to justify Amazon’s scale and ambitions.