NEW YORK: Following Amazon’s failed efforts to break into the smartphone space with its Fire handset last year, the company is said to be laying off engineers in the hardware unit responsible for the handset.
“Dozens” of engineers have been laid off in recent weeks from within Amazon’s Lab126, the secretive hardware unit behind many of the company’s consumer devices, including the Kindle, Kindle Fire and Fire smartphone, sources tell the Wall Street Journal. Amazon has also scaled back or canceled some products, including a large-screen tablet, the Journal reported.
The size of the layoffs — reportedly the first cuts in the 11-year history of the unit – could not be determined due to nondisclosure agreements employees are required to sign, the Journal reported. The unit, which is based in Cupertino and Sunnyvale, California, employs about 3,000 people.
Amazon declined to comment on the report.
The layoffs would appear to signal a retrenching for Amazon, switching the lab’s focus from the smartphones to products for the smart home. With the shift, Amazon would still be trying to challenge Apple and Google, but in a different arena.
Amazon launched the Fire phone — it’s first-ever smartphone — in July 2014. The top-shelf handset featured four front-facing cameras that created 3D graphics, but it failed to ignite much in the way of consumer interest or actual sales.
To try to drum up sales, Amazon cut the subsidized price of the phone in September. Initially available via AT&T for $200 with the standard two-year contract, the 32GB version of phone saw its price drop to just 99 cents. The subsidized price of the 64GB edition fell to $100, down from $300.
Three months after the launch, Amazon took a $170 million charge to wipe out the lost value of its unsold Fire Phones, adding that it still had $83 million in inventory at the end of that period.
In the Fire phone’s wake, Lab126 has turned its focus to new smart-home gadgets such as the Echo, which brought the e-commerce giant into the competitive market of voice assistants. Apple’s Siri, Microsoft’s Cortana and Google’s Google Now speech-recognition software all work in smartphones to allow users to make calls or bring up driving directions. However, Amazon’s Alexa software, which powers the Echo, isn’t used in a phone and instead is in a plug-in speaker that stays at home.
Also still in the works at Lab126 is a computer for the kitchen codenamed Kabinet that would act as a hub for an Internet-connected home, using the same voice-command technique as the Echo, the Journal reported. A tablet that delivers 3D images without the need for special glasses is also said to be in the works.
