There Aren’t a Lot of Reasons to Get Excited About a New Amazon Smartphone

Amazon wants to build a smartphone. It sounds like another piece of news from tech blogs that everyone will forget about in a week. But in the context of how many times tech giants have already tried to enter the mobile market and how spectacularly they failed, this rumor deserves a deeper analysis. According to reports, the device is to be powered by artificial intelligence — which sounds like a natural step for a company that has bet on AI as a key business strategy. The problem is that even for a company with Amazon's resources, entering the saturated smartphone market is practically an impossible mission.

History tries to teach us something. Microsoft, BlackBerry, LG, HTC — they all had something to say in the mobile market. They all lost. Amazon itself already burned itself once — the Fire Phone from 2014 became synonymous with failure, despite having interesting features and the support of an e-commerce giant. The question is: what would be different this time?

Why is Amazon even thinking about this?

Before we assess the chances of success, it's worth understanding the motivation. Amazon is no longer just an online store — it's an ecosystem of services. It has AWS cloud, video streaming, music, audiobooks, smart home devices with Alexa, shopping through facial recognition. A smartphone would be a natural access point to all these services, a control device for the entire home and mobile ecosystem.

From a strategic perspective, this makes sense. Google controls software with Android, but doesn't have its own flagship phone (Pixel is a niche product). Apple has the iPhone, but is locked in its ecosystem. Amazon would like to have a device that would be a gateway to its services — similar to what it did with Kindle Fire tablets, which turned out to be a relative success. The difference is that the tablet market is much smaller and less competitive than phones.

Add to this the fact that AI has become an obsession for the entire industry. Every manufacturer talks about AI in their phone. Samsung has Galaxy AI, Apple has Apple Intelligence, Google has Gemini on Pixel. Amazon, which invests huge sums in artificial intelligence development and has access to advanced models through AWS, would like to have its own device on which it could demonstrate its AI capabilities.

Ecosystem or isolation?

This is where the first serious problem appears. iPhone works because people want an iPhone — the brand, the design, the ecosystem. Galaxy works because Samsung has decades of experience making phones and a huge fan base. Pixel has its supporters, even though it sells poorly, because Google offers integration with Android and its own services that people already use.

Amazon phone? Most people don't think of Amazon as a phone manufacturer. They think of Amazon as a place where they buy packages. This is a fundamental image problem. The Fire Phone was perceived as a device for buying things on Amazon — not as a phone you buy because it's good. Changing this perception is incredibly difficult.

Additionally, Amazon would be forced to make a choice: either make a phone exclusively for its services (which would be isolation), or integrate with Android (which would mean Google controls the base, and Amazon would be just one of the manufacturers). Fire Phone was a hybrid — it had Android, but with strong integration of Amazon services. The result? Nobody wanted it because it was weird — not like a regular Android, but not different enough to be unique.

Manufacturer or integrator?

The second serious problem is manufacturing. Amazon doesn't have phone factories. It would have to order them from someone — probably from the same manufacturer that makes phones for Samsung, Apple, or OnePlus. This means it would have no technological advantage in hardware. All phones on the market use similar chips (Snapdragon, MediaTek), similar displays (Samsung, BOE), similar cameras.

The only thing Amazon could do better is software and service integration. But that's exactly what everyone is already doing — Google with Android, Samsung with One UI, Xiaomi with MIUI. Each of them has billions of users and years of experience managing a phone base. Amazon would be entering the game with zero users and no experience in managing a phone base.

Logistics are also a challenge. Amazon is great at delivering packages, but servicing phones is a completely different game. It requires a network of service centers, spare parts, technical support. Apple has it, Samsung has it, even Xiaomi has it. Amazon would have to start from scratch.

AI as the only bargaining chip

If Amazon really builds this phone, AI would be the only sales argument. But here's a problem — AI in phones is becoming increasingly standardized. Samsung offers Galaxy AI, Apple offers Apple Intelligence, Google offers Gemini. They're all solid, they all do roughly the same thing: help with writing, editing photos, translating, summarizing text.

Could Amazon do something significantly better? Theoretically yes — it has access to advanced models through AWS, it has data from millions of transactions, it knows what people buy. It could make AI that would be better at recommendations, at integrating Amazon services, at automating purchases. But do people want a phone that sells them things better? That sounds more like a nightmare than a feature.

Moreover, Google and Apple have much more resources dedicated to AI than Amazon. OpenAI, Anthropic, DeepSeek — everyone makes models that are available to every phone manufacturer. Amazon would have no exclusivity. Its AI would be exactly the same as every other manufacturer's AI, just with a different interface.

The market is already divided

Let's look at the statistics. Apple has about 27% market share, Samsung about 19%, Xiaomi about 13%, OPPO about 10%, Vivo about 9%. The rest is divided among dozens of manufacturers. This is a market where there is room only for the biggest players — those who can invest billions annually in R&D, who can negotiate with component suppliers, who can build global distribution channels.

Amazon is rich, but its money is spread out — AWS, retail, Prime Video, Alexa. To enter the phone market and do it seriously, it would have to invest several billion dollars annually for at least five years before seeing any profits. And even then, the chances of success would be minimal. Amazon is a business focused on margins and efficiency — phones are a business where you have to build a brand, and that requires long-term investments without guaranteed returns.

Compare this to what happened with the Fire Phone. Amazon invested, tried, and the result was that people didn't want it. Why? Not because the phone was technologically bad, but because nobody was looking for a phone from Amazon. People were looking for an iPhone, a Samsung, maybe a Nexus. Amazon wasn't on that list.

Where Amazon would be strong

If Amazon really goes this route, there are areas where it could be competitive. First, price. Amazon could make a solid mid-range phone at a price well below the competition, relying on margins from services rather than the phone itself. This would be a strategy similar to what Google tried with Pixel — selling below cost to gain users for its services.

Second, ecosystem integration. If someone is already using Alexa, Prime Video, Prime Music, Kindle — an Amazon phone could be a natural extension. But that's not enough to interest people who aren't already in the Amazon ecosystem.

Third, support for Alexa. Amazon could make Alexa on the phone much better than the competition — voice assistants on other phones are weak. But again, that's not enough to interest the mass market.

Final verdict

Amazon smartphone is an idea that makes sense on paper, but doesn't make sense in reality. The mobile market is already completely consolidated. There is no room for a new player, regardless of how much money they have. Fire Phone wasn't a failure because the phone was bad — it was a failure because nobody wanted a phone from Amazon. This fundamental reality hasn't changed.

If Amazon really is building this phone, the best scenario is a niche product that sells a few million units a year — mainly Amazon fans and enthusiasts. But that wouldn't be a success — it would be confirmation that even a tech giant with unlimited resources can't do anything against existing players.

Instead, Amazon should focus on what it's good at — building services that work on all devices, regardless of manufacturer. Alexa on every phone, Prime Video on every screen, integration with every system. This is a strategy that has a chance of success, because it doesn't require changing the perception of Amazon as a hardware manufacturer. It only requires better execution of what Amazon already does.