The Echo business has always looked like Amazon is playing the long game from the outside. Most importantly, the company’s home hardware is a useful tool for getting Alexa into millions of homes. But when a company tightens its belt amid broader economic headwinds, no division is safe from cost cutting — especially not one that’s reportedly losing $5 billion in annual sales.
The Wall Street Journal noticed this week Amazon’s device group could be the last to be hit by budget cuts as the company braces for further macroeconomic disruption. The paper notes that “Amazon’s leadership is closely evaluating its Alexa activities, according to some of the people,” citing internal documents.
Many of the cuts to date have focused on longer-tailed products. However, Devices is a mature division for the company and includes a wide variety of Echo home devices, Fire tablets and Kindles, among others.
Amazon offered londonbusinessblog.com a fairly standard response to the report, but noted that the normal performance rating is definitely affected by the overall financial environment.
“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 leadership team regularly reviews our investment prospects and financial performance, including as part of our annual operating plan review, which takes place each fall. Of course, as part of this year’s review, we’re taking into account the current macro environment and considering opportunities to optimize costs.”
A second note, meanwhile, highlights Alexa’s overall successes:
Alexa started as an idea on a whiteboard. In less than a decade, it has turned into an AI service that allows millions of customers to communicate billions of times a week in different languages and cultures around the world. Even in the past year, Alexa interactions have increased by more than 30%. We’re as optimistic about the future of Alexa today as ever, and it remains an important company and an important area of investment for Amazon.
Andy Jassy is tasked with reducing costs across the company — an enviable task in any economy. In his 2021 shareholder letter, the CEO took a trip down memory lane, starting with the first Kindle in 2007, as he highlighted the ups and downs of the category, including a little insight into the life (and death) of Fire Phone, and noted: “The phone was unsuccessful, and while we determined we were probably late to this party and sent these resources elsewhere, we hired some great long-term builders and learned valuable lessons from this failure that served us well. have come in handy in devices like Echo and FireTV.”
Jassy also highlighted the evolving future of the division, writing:
Our goal is for Alexa to become the world’s most helpful and resourceful personal assistant, making people’s lives more meaningful and better. We still have a lot to think about and repeat, but customers continue to indicate that we are on the right track. We have several other devices in various stages of evolution (e.g. Ring and Blink offer the leading digital home security solutions, Astro is a brand new home robot that we just launched at the end of 2021), but it’s safe to say that all of our devices, whether you Speaking of Kindle, FireTV, Alexa/Echo, Ring, Blink or Astro, it’s an invention in the making and many more to come that continue to improve customers’ lives.