Amazon Devices Chief Pledges Big Alexa Bets Despite Job Cuts

(Bloomberg) — Amazon.com Inc.’s devices chief said the company remains committed to building out the Alexa ecosystem despite job cuts in the once fast-growing division.

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When Amazon last month initiated its biggest-ever round of layoffs, they fell first and hardest on the Devices and Services group. The unit is responsible for the Alexa voice-activated assistant, Echo smart speakers, Fire streaming devices and home robots.

In an interview Tuesday, Senior Vice President Dave Limp called the cuts “a painful event and not one you ever want to do.”

Still, he said: “Is there some lack of commitment to Amazon’s devices and services business? By any measure, the answer is no.” He cited continued big bets on Alexa, Zoox self-driving taxis and Kuiper internet satellites as evidence that Chief Executive Officer Andy Jassy is willing to invest billions on projects that might not pay off for years.

“I’ve yet to be in a meeting where he doesn’t call out those as big inventions and big bets,” Limp said. “But at the same time, he is also inspecting them and spending time with them.”

Bloomberg and other news outlets reported that Amazon’s layoffs could total 10,000 employees companywide, although teams were still finalizing their plans.

Job cuts in Limp’s division affected “well under 2,000 people,” he said, spread about evenly between groups working on the Alexa voice assistant and other teams. The group still employs “tens of thousands” of people, Limp said, with about 10,000 working specifically on Alexa-related projects—or about the same number as in 2018. Amazon also wound down teams working on Alexa-related telehealth services, original games and some unreleased projects.

Alexa-powered Echo speakers were among the hottest consumer technology products when they debuted in 2014. People used the voice-activated devices to play music, find answers to trivia and other tasks. Amazon expanded the Alexa team rapidly in an effort to fulfill founder Jeff Bezos’s desire to re-create the Star Trek talking computer—and get there faster than Alphabet Inc. and Apple Inc.

But users have long expressed disappointment in what they see as the technology’s limitations. Many wound up using the speakers as a timer or weather announcer. Some stopped using them altogether. Inside Amazon, executives fretted that user engagement falls after the novelty wears off, Bloomberg reported last year.

Limp insisted that engagement with Alexa has been growing and that the number of people using the software is at an all-time high. But he conceded that the devices group is still not profitable, although he disputed published reports that operating losses in recent years had totaled as much as $5 billion. (Limp declined to provide a precise figure.)

The devices themselves are often sold at or near cost. Becoming profitable will require persuading customers who use the hardware to pay for such services as online shopping, music or audiobooks, Limp said.

“I think the momentum of monetization of Alexa is on the right track,” he said.

On Alexa use

The death of any consumer electronics business is when people start putting that device into a drawer. And I can assure you that is not happening with Alexa, Echo or others [technologies] that has Alexa on it.

On the proliferation of chatbots, like ChatGPT

I’ve spent a lot of time with a couple of these, just to benchmark myself. I’d say our Q&A is one of the, if not the, best in the world. And these other models are not there yet. I think there’ll be different use cases for each of them. But, you know, the only downside—they work and they’re moving very fast—is just how expensive they are to train.

On virtual reality, augmented reality and the metaverse

I’ve been on record for a long time that I have nothing against VR, but I just don’t think it’s ever gonna be that big. It’ll have a gaming use case. It may have some enterprise use cases.

That being said, long-term, I think AR has a lot of benefits, and I think there will be a lot going on in AR because it’s less immersive. The last thing I want to do is drop into the metaverse for eight hours a day. Whatever your version of that metaverse is, that is a dystopian idea in my mind.

On Astro, Amazon’s limited-release home robot

I just feel like the whole industry’s not taking enough risk. And if you take that risk, you better be prepared to have very public failures too, right? You know, we did a ring with Alexa on it [that] didn’t work, and that’s okay. So Astro fits in that category, which is we have a long-term hypothesis, open to debate, that somewhere down the road, that every household is gonna have some form of robot in it. We have a lot of data that suggests why that’s the case.

We have over 300,000 people in line for invitations. The number of people who are converting is higher than we anticipated.

On Jassy’s approach to new products, versus Bezos’s

I think the places where he’s passionate, it might be they’re somewhat different and probably complementary to Jeff. Jeff was very into videos and movies and those kinds of things. So he had lots of interesting suggestions and inventions in our Fire TV business as an example. Andy loves music. It’s like his passion is music. And so, his invention and inspection on things around Alexa and some of our speakers and those kinds of things has been awesome.

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