From the outside, the Echo business has always looked like Amazon was playing the long game. Most notably, the company’s home consumer hardware is a practical means of bringing Alexa into millions of homes. But when a company tightens its belt amid broader economic headwinds, no department is safe from cost-cutting — certainly one that’s reportedly operating at a $5 billion annual loss in revenue.
The Wall Street Journal noted this week that Amazon’s equipment group could be the last to be hit by cuts as the company braces for more macroeconomic disruptions. The paper notes that “Amazon leadership, according to some people, is closely evaluating its Alexa business,” citing internal documents.
Many of the previous cuts have focused on long-tail products. However, Devices is a mature division of the company, which includes a wide range of Echo home devices, Fire tablets, and Kindles, among others.
Amazon offered TechCrunch a fairly canned response to the report, but noted that normal performance review is certainly impacted by the overall financial climate.
“We continue to be 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 writes. “Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review, which takes place each fall. As part of this year’s review, we are of course taking into account the current macro environment and examining opportunities for cost optimization.”
A second comment, meanwhile, highlights Alexa’s overall achievements:
Alexa started as an idea on a whiteboard. In less than a decade, it has grown into an AI service that millions of customers interact with billions of times a week in different languages and cultures around the world. Even in the last year, Alexa interactions have increased by more than 30%. Today, we are more optimistic than 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 company – a task enviable in any economy. In his 2021 shareholder letter, the CEO took a trip down memory lane, beginning with the first Kindle in 2007, while highlighting the ups and downs of the category, including a little glimpse into the life (and death) of the Fire phone, and remarked, “The phone was unsuccessful, and while we realized we were probably late to that party and directed those resources elsewhere, we hired some fantastic long-term developers and learned valuable lessons from that failure, which has stayed with us on devices like the Echo and FireTV.” have rendered good service.”
Jassy also highlighted the developing future of the division, writing:
Our goal is for Alexa to be the world’s most helpful and resourceful personal assistant, making people’s lives meaningfully easier and better. We still have a lot to invent and iterate about, but customers continue to show us that we’re on the right track. We have several other devices in different stages of development (e.g. Ring and Blink offer the leading digital home security solutions, Astro is a brand new home robot that we only launched in late 2021), but it’s safe to say that each of our Devices, whether you’re talking about the Kindle, FireTV, Alexa/Echo, Ring, Blink or Astro, is an invention in the process with much more to come that will continue to improve customers’ lives.