Amazon has been fully committed to Alexa despite layoffs, says hardware boss

David Limp, senior vice president of devices and services at Amazon.com Inc., introduces the Amazon Echo Dot smart speaker during a launch event at the company’s Spheres headquarters in Seattle, Washington, Thursday, September 14. 20th, 2018.

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Amazon hasn’t given up on its Alexa voice assistant, hardware chief Dave Limp said Friday, though the team behind the tech has been a prime target of the biggest layoffs in the company’s history.

Amazon began laying off employees across its corporate workforce last year as part of CEO Andy Jassy’s broader move to cut spending amid the deteriorating economic outlook and slowing sales growth. Affected groups also included the company’s devices and services organization, which oversees development of products like Alexa, Echo smart speakers, and Kindle e-readers.

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Nearly 2,000 employees in Limp’s department have been laid off as a result of the downsizing, he told CNBC’s Jon Fortt in an interview with TechCheck.

This week Jassy said the company is aiming to cut more than 18,000 jobs, mostly in its stores and human resources departments. Previously, a person familiar with the matter told CNBC that 10,000 employees would be laid off, but noted the number is fluid and subject to change.

In addition to the layoffs, Amazon has also frozen new hires to its corporate workforce and shelved some of its more experimental projects, like its telehealth service and a video calling device for children.

“We looked at projects that in that uncertainty probably represented the risk/reward tradeoff for those projects, and what they might deliver for clients wasn’t quite there,” Limp said. “Some of it was in Alexa, some of it was in other parts of my organization.”

Still, Amazon remains “fully committed to the Alexa unit,” even as the company is taking steps to be more disciplined about costs in “a very uncertain economy,” Limp said.

“There are still thousands upon thousands of people working on this project,” Limp said at the Consumer Electronics Show in Las Vegas. “It’s a big project.”

Since its launch in 2014, Amazon has made major investments in Alexa and hired top talent to build out the technology, largely at the direction of Jeff Bezos, who pioneered Alexa and firmly believed that voice was a key part when people interact with computers would be the future. At one point, Amazon had 5,000 employees working on Alexa and Echo.

Amazon has been selling devices like the Echo at or near cost because the goal isn’t to make money from them. Instead, the company sees them as a means of bringing customers into the broader Amazon ecosystem, where they’ll buy something from amazon.com or its other properties.

Limp dismissed the idea that Amazon might need to raise prices significantly because it takes a more rigorous view of costs. The prices of some goods used in Amazon devices, such as memory and displays, have risen and these could be passed on to consumers, he said. But in general, Amazon’s hardware business model remains the same, Limp said.

“We try to sell our products at about breakeven, sometimes a little more,” Limp said. “Then when customers use them, they say they’re shopping through their Alexa, Amazon capitalizes on that and gives the customer a great shopping experience, and that’s how we want to monetize those things in the future.”

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