Baidu Inc is adding a phone to its portfolio of smart gadgets as it builds out a hardware ecosystem to complement its internet services.

The Beijing-based firm’s Xiaodu unit, similar to Amazon.com Inc’s Alexa division, will unveil its first smartphone product next week, a spokesperson said Monday. Much like Amazon and US search leader Google, Baidu has developed smart speakers and displays for the home. The Chinese company calls its DuerOS software for those devices a conversational artificial intelligence system.

Baidu was among the earliest to offer an alternative to OpenAI’s ChatGPT - with its Ernie Bot unveiled in March - following years of investment in AI. The company has said it plans to embed its AI tools into all major business lines, including in search, autonomous driving and smart gadgets.

The introduction of a handset under the Baidu umbrella would mark the first major Chinese entrant in the congested mobile market in years - and the first from among the country’s Internet giants. But it’s unclear how ambitious the company’s entry will be.

“I don’t think Baidu is going all out in the smartphone business, which is already very mature,” said Shawn Yang, managing director at Blue Lotus Capital Advisors. “It’s tough to make an impact just from a software angle.”

The smartphone market suffered a double-digit decline last year, pressuring already thin profit margins for Chinese manufacturers. Global leaders Apple Inc and Samsung Electronics Co take the lion’s share of profit from device sales, with other companies looking to recoup costs via software partnerships and app distribution deals.

 - Bloomberg