Signs have emerged that Amazon is looking to challenge the smartphone market again after 10 years. The internal project is codenamed "Transformer".

Reuters reported on Thursday, citing multiple sources, that Amazon is developing a new smartphone through a unit under its devices and services division.

The smartphone Amazon is developing is positioned as a personalised mobile device that links with voice AI assistant Alexa. The focus is on serving as a touchpoint that keeps Amazon customers connected to its services throughout the day.

The Transformer project is led by the ZeroOne team, set up under Amazon's devices division to develop innovative devices. The team is led by J Allard (제이 앨러드), a former Microsoft executive who was involved in developing the Zune music player and the Xbox game console.

AI functions are central to the Transformer project. Amazon sources said integrating AI into the device could replace the traditional app-store model of downloading and registering apps.

According to the report, Amazon is considering two directions: a standard smartphone and a "dumbphone" with minimal functions. Amazon entered the smartphone market with the Fire Phone in 2014, but the outcome was not good. The Fire Phone was discontinued after 14 months.

Colin Sebastian (콜린 세바스찬), an analyst at financial firm Baird, said, "Just because Amazon failed in smartphones in the past does not mean it cannot try again, but it will not be easy." He said, "It must clearly present a reason for consumers to change phones. People are strongly tied to existing app stores."

Amazon did not disclose a specific launch timeline, price or investment size for the smartphone. Sources said the project could be halted depending on changes in strategy or financial conditions.