The Echo business has always resembled Amazon playing the long game from the outside. Above all, the company’s consumer hardware is a convenient vessel for bringing Alexa to millions of homes. But when a corporation is seriously tightening its belt amid broader economic headwinds, no division is safe from cost-cutting, certainly not one that is supposedly operating on $5 billion a year in lost revenue.
The Wall Street Journal this week noted that Amazon’s device group could be the latest to be hit by cutbacks as the company braces for further macroeconomic disruption. The newspaper notes that “Amazon leadership is closely evaluating its Alexa business, according to some people,” citing internal documents.
Many of the cutbacks so far have focused on longer-tail products. Devices is a mature division for the company, however, it encompasses a wide range of Echo home devices, Fire and Kindle tablets, among others.
Amazon offered TechCrunch a rather boilerplate response to the report, while noting that the normal performance review is certainly affected by the overall financial climate.
“We remain excited about the future of our largest businesses, as well as newer initiatives like 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 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 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 grown into 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, 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 business and investment area for Amazon.
Andy Jassy has been tasked with cutting costs across the company, a task that is unenviable in any economy. In his 2021 shareholder letter, 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 glimpse into the life (and death) of the phone. Fire, noting, “The phone was unsuccessful, and while we determined that we were probably too late to this party and directed these resources elsewhere, we hired some fantastic long-term builders and learned valuable lessons from this failure that have served us well.” well on devices like 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 have a lot more to invent and iterate on, but customers continue to indicate that we are on the right track. We have several other devices in various stages of evolution (eg Ring and Blink provide the leading digital home security solutions, Astro is a new home robot we just launched in late 2021), but it’s safe to say Each of our devices, whether you’re talking Kindle, FireTV, Alexa/Echo, Ring, Blink, or Astro, is an invention in the making with much more to come that will continue to improve customers’ lives.