Amazon reportedly lays off staff and scales back hardware development in wake of Fire Phone flop

By midian182
Aug 27, 2015
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  1. Amazon has laid off “dozens of engineers” from its Lab126 hardware unit as a result of the Amazon Fire Phone’s failure, according to reports from The Wall Street Journal.

    Sources at the paper claim Amazon will also be scaling back or discontinuing several projects at the secretive hardware development shop. This includes a large screen tablet the company was working on named Project Cairo, a projector codenamed Shimmer, and a ‘smart stylus’ for converting handwriting into digital lists called Nitro.

    The $650 Amazon Fire Phone was a critical and commercial failure when it launched in July last year. Despite being well-built and sporting an impressive camera, the phone came with a clumsy UI, some useless gimmicks (such as its 3D effects) and lacked Google Play access. But one of the biggest criticisms of the phone was that it was hugely focused on selling you things from Amazon; one reviewer called it nothing more than an overpriced shopping basket. The device sold just 35,000 units in its first 3 months. In October, Amazon said it was taking a $170 million write-down on unsold inventory of the phones.

    Projects that the Silicon Valley-based Lab126 are still working on include a high-end computer for the kitchen – code named Kabinet – designed to serve as a home internet hub and capable of taking voice commands, and a 3D-enabled tablet that will supposedly make images pop off the screen without the need for special glasses. This technology differs from the Fire phone’s, which is used to give images on the phone’s screen more depth.

    In January, Amazon’s hardware group underwent a major restructuring that saw several top executives leave the division. Much like today’s reported layoffs, these changes were attributed to the Fire Phone flop. A follow up to the device was being worked on at Lab126 and sources claimed it would release with a new set of features in 2016, but it now seems unlikely that the Amazon Fire Phone 2 will ever become a reality.

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  2. dirtyferret

    dirtyferret TS Enthusiast Posts: 62   +37

    I own two Kindles (HD & HDX) and the amazon fire tv so I can say the failure of the fire phone was a complete not a single person...the second it was announced.
  3. AnonymousSurfer

    AnonymousSurfer TS Guru Posts: 451   +37

    I don't understand why businesses are so eager to enter the phone market. It's so hard to break in and make a phone that sells, while its extremely easy (in comparison) to make quality software and make a bunch of money. Amazon, Sony, Microsoft... You guys gotta give up.
  4. davislane1

    davislane1 TS Evangelist Posts: 3,375   +2,165

    Doing business is not about taking the easy option. It's about taking the option with the best risk/reward ratio. Businesses that stick to the easy money and don't risk failure trying to get into difficult markets get swallowed by companies like Amazon. If you want to win, you have to shoot for a 3-pointer every now and then.
  5. AnonymousSurfer

    AnonymousSurfer TS Guru Posts: 451   +37

    Sony and Microsoft have been shooting that 3-pointer for a couple years now and have constantly missed. It's hurting them so much, they are about to get kicked off the team. Sure, a three pointer every once in a while is okay (Amazon), but it shouldn't become a habit before it becomes a success
  6. davislane1

    davislane1 TS Evangelist Posts: 3,375   +2,165

    Businesses of their scale operate on a long time horizon. Breaking into new markets at their level is a 10-20 year proposition, and the first 2/3 of that is typically at significant cost. They'll cut the programs when they can no longer afford them or when they can no longer justify the expense, as Amazon has done.

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