Amazon eyes device group as it undertakes broad cost-cutting

The Echo business has always sounded like Amazon playing the long game from the outside. Above all, the company's consumer hardware is a convenient way to bring Alexa into millions of homes. But when a company is seriously tightening its belt amid broader economic headwinds, no division is immune to cost cutting — certainly not one that would work with a $5 billion revenue loss. per year.

The Wall Street Journal noted this week that Amazon's device group may be the latest to suffer cuts as the company braces for further macroeconomic disruption. The newspaper notes that "Amazon management is evaluating its Alexa business closely, some people say," citing internal documents.

So far, many discounts have been focused on longer tail products. Devices is a mature division for the company, however, encompassing a wide range of Echo home devices, Fire tablets and Kindles, among others.

Amazon offered TechCrunch a fairly boilerplate response to the report, while noting that normal performance review is certainly affected by the overall financial climate.

"We remain excited about the future of our major businesses, as well as new 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 through our annual operating plan review, which takes place in the fall of each year. As part of this year's review, we are of course taking into account the current macro environment and considering opportunities for cost optimization."

A second comment, meanwhile, highlights Alexa's overall successes:

Alexa started out as an idea on a whiteboard. In less than a decade, it has evolved into an AI service that millions of customers interact with billions of times every week in different languages ​​and cultures around the world. Even last year, interactions with Alexa grew by more than 30%. Today, we're as optimistic as ever about the future of Alexa, and it remains an important business and area of ​​investment for Amazon.

Andy Jassy was tasked with reducing costs across the business, an unenviable task in any economy. In his 2021 shareholder letter, the CEO took a trip down memory lane, starting with the first Kindle in 2007, while outlining the highs and lows of the category, including a little glimpse into life (and death) of the Fire Phone, noting, “The phone failed, and while we determined we were probably too late for this party and directed those resources elsewhere, we hired some fantastic long-term builders and pulled valuable lessons from that failure that have served us well in devices like the Echo and FireTV."

Jassy also highlighted the future development of the division, writing:

Our goal is for Alexa to be the world's most useful and resourceful personal assistant, making people's lives easier and dramatically better. We still have a lot to invent and iterate, 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 provide leading digital home security solutions, Astro is a brand new home robot we just launched in late 2021), but it's sure 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 many more to come that will continue to improve customers' lives.