After Amazon’s workforce doubled during the pandemic, the company is in the process of laying off 10,000 of its employees. According to the Financial Times, Amazon’s hardware teams working on Alexa, Kindle, and Halo are among the first to be affected by layoffs.
“It’s not surprising that that’s where they decided to start,” said one employee on the Kindle team speaking to the Financial Times. “What isn’t clear to any of us is if it ends there.”
Amazon did launch several new hardware products this fall including the Kindle Scribe, a 5th-gen Echo Dot, and a 3rd-gen Fire TV Cube. The company previously launched a new Astro home robot last year, and it followed up with the acquisition of iRobot, the makers of the automated Roomba vacuum cleaners for $1.7 billion this year.
Over the years, Amazon managed to create a strong smart home ecosystem with first-party hardware and partner devices that integrate with Alexa. However, according to a previous report from Business Insider citing an employee familiar with Amazon’s hardware team, the company is about to lose approximately $10 billion on Alexa and other devices this year.
Since Amazon launched Alexa on its original Echo speaker back in 2014, the company has never figured out a way to monetize all the data it gets from Alexa voice queries. Moreover, it turns out that very few people actually use Alexa to make purchases on Amazon.
“Leadership keeps emphasizing that they’re still investing heavily in Alexa, which I think is true, but I think they were just investing too heavily given the current economic state,” one current employee on the Alexa team told the Financial Times. “It’s losing too much money.”
In an interview with GeekWire this week, Charlie Kindel, a tech veteran who previously led the development of all Echo/Alexa capabilities argued that Amazon’s digital assistant now suffers from a huge tech debt. “You’re not only trying to ship new features, but engineer and fix all the stuff and keep the lights on for all the stuff you’ve already launched. You’re in the throes of bringing on tons of new people constantly. And it just wears the organization down when it gets to that scale,” the former Amazon exec said.
If Kindel also believes that scaling down Alexa is the right thing to do for Amazon, the company’s hardware team represents just a fraction of Amazon’s global workforce of 1.6 million employees. In a memo to staff, Amazon CEO Andy Jassy hinted that more layoffs may be announced in the coming months.
“Our annual planning process extends into the new year, which means there will be more role reductions as leaders continue to make adjustments. Those decisions will be shared with impacted employees and organizations early in 2023, the Amazon CEO said earlier this month.