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Amazon device unit morale wanes amid cuts, weak development pipeline

Amazon's DOT Alexa device is shown in this picture illustration taken October 1, 2021. REUTERS/Mike Blake/Illustration/File Photo

Amazon devises unit morale wanes amid cuts, weak development pipeline. Some employees at Amazon’s (AMZN.O) once-storied hardware division, which produces well-known products like the Kindle reader and Echo voice assistant, claim morale has worsened due to staff reductions and a pipeline of products they believe won’t be commercial successes.

The division, Lab126, was a priority for Amazon’s founder, Jeff Bezos, who portrayed it as a catalyst for future initiatives. However, more recently, it has been battered by mass layoffs and important executive departures, including that of its leader, Dave Limp, a 13-year veteran who has announced plans to retire later this year.

Due to their employment agreements, Reuters spoke with more than 15 current and former employees who described a jumble of new devices under development. Many of these devices were intended to entice users to use the once-ground-breaking Alexa voice service, which now faces a formidable challenge in the era of generative AI and ChatGPT.

The firm, the largest online retailer in the world, is conducting a devices and services launch event on September 20. Among other announcements, it is anticipated to showcase updated models of certain current goods, including the Fire tablet, Fire TV stick, and Kindle Scribe e-reader. Reuters was unable to ascertain Amazon’s whole announcement intentions.

The news organization was able to pinpoint five various new devices that are currently in development. These include a home projector that turns any surface into a screen, a carbon monoxide detector, and a home energy usage monitor with Alexa integrated in. Some sources referenced other projects, but their specifics could not be verified.

According to the insiders, Amazon believes that customers will put Alexa-enabled gadgets in more places of their houses and get used to using the system constantly.

According to the sources, the company has also worked on virus-testing equipment initially designed to find Covid and an Alexa-enabled digital measuring device (for example, for mapping out the measurements of one’s home).

The secrecy surrounding Amazon’s internal projects at Lab126 has long been essential to the company’s effort to establish itself as a tech innovator. According to the sources, some of them have already been altered or scrapped entirely, while others won’t be commercially produced due to market or financial issues.

Despite being relatively small inside Amazon’s vast empire, the device division has been symbolically significant as a testing ground for new technology and as Alexa’s public face through voice-assistant gadgets. Amazon has claimed that its devices and services division is not profitable without offering specific numbers.

An Amazon representative declined to comment on goods still in the works.

In response to inquiries on morale and equipment at Lab126, spokeswoman Kinley Pearsall stated in writing that it was “inaccurate to suggest that a few anecdotes paint a picture of reality for an organization as large and diverse as Devices and Services.” The company “has been a mainstay of innovation for more than a decade and has created a series of products that are significant parts of people’s daily lives.”

According to the insiders, the lab’s years of defeats and changing tactics have decreased morale. Many cited the 2021 Astro home monitoring robot, which, at $1,600, is still a niche product and has come under fire for giving some users the creeps.

The sources claimed it came after several unsuccessful products, including a voice-activated clock, the Fire smartphone, and a camera that can also be a personal stylist.

Nearly ten years after its debut, Amazon is reportedly attempting to revive interest in its Alexa voice assistant as it contends with AI chatbots from Alphabet’s (GOOGL.O) Google and several startups, including Microsoft-backed (MSFT.O) OpenAI. Since late last year, ChatGPT and other tools of a similar nature have astounded users and investors with their capacity to create long-form and logical text responses to complicated queries. This format is challenging to transfer to a voice assistant.

Amazon said in August that it is creating its own generative AI to support Alexa but hasn’t stated much more. Amazon just announced that “every one of our teams is working on building generative AI applications.”

Alexa may be used to purchase from Amazon’s online shop and deliver spoken responses to inquiries. It is typically accessed through devices like Amazon televisions and Echo speakers. The business has also sought to turn Alexa into a hub for home automation so that appliances and lightbulbs may be voice-operated.

But Amazon hasn’t been able to use Alexa to make money consistently.

“Amazon’s ability to infiltrate consumers’ lives is limited because they don’t have control of the smartphone,” said Avi Greengart, head of analytical company Techsponential. “Voice-first is not a great shopping experience,” he declared.

Exodus Limp intends to leave before the year is over. He has been in charge of device strategy, including Ring video doorbells. Bloomberg reports that Microsoft’s Panos Panay, who led the creation of the Surface, will succeed Amazon. Amazon and Microsoft denied requests for comments, while Microsoft did not respond.

Limp succeeds veteran business leaders Gregg Zehr, president of Lab126, and Tom Taylor, senior vice president of Alexa, who departed late last year. After less than two years, Ken Washington, who managed Astro, left to join Medtronic in May.

In response to soaring online sales, CEO Andy Jassy has started decreasing Amazon’s personnel after it nearly doubled during the pandemic. The layoffs also impacted Amazon’s retail sector, cloud computing, groceries, and advertising divisions.

Employees of Alexa were affected by rounds of layoffs that started last year and led to 27,000 job losses at Amazon. Despite being widely used, according to research firm Insider Intelligence, Alexa lagged behind Google and Apple’s (AAPL.O) Siri, which had 81.5 million and 77.6 million users, respectively, in 2022.

Amazon has claimed for years that it can sell gadgets for close to their production costs and yet make money from the services provided to them. That has been successful for its Kindle division as people who own e-readers have been buying e-books for many years, with Amazon receiving a portion of each sale.

Alexa is a different story. Most initiatives to profit from it have focused on streamlining Amazon.com purchases. However, according to a dozen people who have worked on Alexa, there isn’t much proof that customers are making purchases they otherwise wouldn’t.

Users like Bruno Borges, 40, of Vancouver, Canada, who claimed he mainly used his Echo for its timer, music, and weather updates, present a difficulty.

“I would never shop on it because I cannot compare things like on the website, so I wonder if I’m getting the best deal,” he declared. He recently put his three-year-old gadget in a drawer and no longer intends to use it.

Employees claim that in recent years, leadership has changed toward a desire to develop products at a lower cost in order to perhaps profit from the sale of hardware itself.

Five sources with knowledge of the situation claim that the projector that Amazon is developing to cast images across a room and transform common surfaces into displays has been delayed because of this price emphasis.

Using the projector, users might make Zoom calls that track them as they move or beam recipes on the wall above their stove. Amazon invested in a company named Lightform to advance the idea, but it is determined to cut the projector’s price by hundreds of dollars before it can be purchased. Lightform had been offering projectors starting at $700.

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