The Echo business has always looked like Amazon is playing the long game from the outside. Best of all, the company’s home consumer hardware is a convenient ship for bringing Alexa into millions of homes. But no sector can escape cost cutting if companies are tightening their belts severely amid broader economic headwinds.
The Wall Street Journal noted this week that Amazon’s devices group could face job cuts as it prepares for further macroeconomic turmoil. Citing internal documents, the newspaper said that “some people say Amazon management is taking a close look at the Alexa business.”
Many of the cuts to date have focused on long-tail commodities. Devices is a mature division for the company, but it covers a wide range of Echo home devices, Fire tablets, Kindles and more.
Amazon provided TechCrunch with a fairly formulaic response to the report, but noted that its regular performance reviews are indeed impacted by its overall financial situation.
“We remain excited about the future of our large business and new initiatives such as Prime Video, Alexa, Grocery, Kuiper, Zoox and Healthcare,” the company wrote. “Our senior leadership team regularly reviews our investment outlook and financial performance as part of our annual business plan review each fall. We are looking at opportunities to take that into account and optimize costs.”
The second comment, on the other hand, highlights Alexa’s overall success.
Alexa started with an idea on a whiteboard. In less than a decade, it has turned into an AI service with millions of customers interacting billions of times each week in different languages and cultures around the world. Even in the last year, interactions with Alexa have increased by over 30%. As optimistic as ever about the future of Alexa today, it is an important business and investment area for Amazon.
Andy Jassy is tasked with cutting costs across the company, a task that is not enviable in any economy. In his 2021 letter to stockholders, the CEO takes a trip down memory lane, starting with his first Kindle in 2007, and including a little insight into the life (and death) of the Fire phone, revealing the categories. Highlighting the ups and downs, he said: “This call didn’t work. We decided it was probably too late for this party and turned these resources elsewhere, but we hired great long-term builders, learned valuable lessons from this failure, and It’s been useful on devices like Echo and FireTV.”
Jassy also highlights the evolving future of the division, writing:
Our goal is to make Alexa the world’s most helpful and resourceful personal assistant, making people’s lives meaningfully easier and better. We’re inventing and iterating a lot more, but our customers keep pointing out that we’re on the right track. Ring and Blink offer leading digital home security solutions, and Astro is a new home robot just launched in late 2021). Whether we’re talking about , Kindle, FireTV, Alexa/Echo, Ring, Blink, or Astro, more products are in the works to keep improving our customers’ lives.
