The Echo business has always looked from the outside like Amazon playing the long game. Above all, the company’s home consumer hardware is a convenient vessel for bringing Alexa into millions of homes. But when a corporation does something serious belt-tightening amid broader economic headwindsno division is immune from cost-cutting—certainly not one that is said to be operating at a $5 billion annual revenue loss.
The Wall Street Journal this week noted that Amazon’s device group could be the latest to be hit by layoffs as the company braces for further macroeconomic turmoil. The newspaper noted that “Amazon management is carefully evaluating its Alexa business, according to some of the people,” citing internal documents.
Many of the cuts so far have been focused on longer-tail products. However, Devices is a mature division for the company that encompasses a wide range of Echo home devices, Fire tablets and Kindles, among others.
Amazon offered TechCrunch a rather formulaic response to the report, while noting that a normal review of performance is certainly influenced by the overall financial climate.
“We remain excited about the future of our larger businesses as well as newer initiatives such as Prime Video, Alexa, Grocery, Kuiper, Zoox and Healthcare,” the company wrote. “Our senior management team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review, which occurs in the fall each year. As part of this year’s review, we are of course taking into account the current macro environment and considering opportunities to optimize costs.”
Meanwhile, a second comment highlights Alexa’s overall successes:
Alexa started as an idea on a whiteboard. In less than a decade, it has become an AI service that millions of customers interact with billions of times every week in different languages and cultures around the world. Even in the last year, interactions with Alexa have increased by more than 30%. Today, we are as optimistic about the future of Alexa as we have ever been, and it remains an important business and area of investment for Amazon.
Andy Jassy is tasked with cutting costs at the company, an unenviable task in any economy. In his 2021 letter to shareholders, the CEO took a trip down memory lane, starting with the first Kindle in 2007, while highlighting the ups and downs of the category, including a little insight into the life (and death) of the Fire phone. noting, “The phone was a failure, and while we decided we were probably late to that party and directed those resources elsewhere, we hired some fantastic long-term builders and learned valuable lessons from that failure that have served us well in devices like the Echo and FireTV.”
Jassy also highlighted the evolving future of the division, writing:
Our goal is for Alexa to be the world’s most useful and resourceful personal assistant, making people’s lives significantly easier and better. We still have a lot of reinvention and iteration to go, but customers continue to show that we’re on the right track. We have several other devices at various stages of evolution (eg Ring and Blink provide the leading solutions for digital home security, Astro is a brand new home robot that we just launched in late 2021), but it’s safe to say, that every one of our devices, whether you’re talking about Kindle, FireTV, Alexa/Echo, Ring, Blink or Astro, is an invention in progress with so much more that will continue to improve customers’ lives.