Amazon still ‘fully committed’ to Alexa despite job cuts, hardware chief says

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David Limp, senior vice president of devices and services at Amazon.com Inc., presents the Amazon Echo Dot smart speaker during an unveiling event at the company’s Spheres headquarters in Seattle, Washington, U.S., on Thursday, Sept. 20, 2018.
Andrew Burton | Bloomberg | Getty Images

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

Amazon last year began laying off employees in its corporate workforce as part of CEO Andy Jassy’s broader move to curtail expenses amid a worsening economic outlook and slowing revenue growth. The company’s devices and services organization, which oversees the development of products such as Alexa, Echo smart speakers and Kindle e-readers, was among the groups affected.

Just under 2,000 people in Limp’s division were let go as a result of the job cuts, he told CNBC’s Jon Fortt in an interview on TechCheck.

This week, Jassy said the company aims to eliminate more than 18,000 roles, mostly in its stores and human resources organizations. Previously, a person familiar with the matter told CNBC that 10,000 employees would be cut, but noted that the number was fluid and could change.

Alongside the layoffs, Amazon has also frozen new hiring in its corporate workforce, and shuttered some of its more experimental projects, such as its telehealth service and a video-calling device for kids.

“What we did is we looked at projects that were probably, in this uncertainty, the risk-reward for those projects and what they might deliver for customers wasn’t quite there,” Limp said. “Part of that was in Alexa, part of that was in other parts of my organization.”

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

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

Since its launch in 2014, Amazon has made big investments in Alexa and assigned top talent to grow the technology, largely at the direction of Jeff Bezos, who first pitched Alexa and strongly believed voice would play a key role in how people interact with computers in the future. At one point, Amazon had 5,000 people working on Alexa and Echo.

Amazon has sold devices such as the Echo at or near cost because its goal isn’t to make money from them. Instead, the company sees them as a vehicle for bringing customers into the broader Amazon ecosystem, where they’ll purchase something from amazon.com or its other properties.

Limp rejected the idea that Amazon may have to raise prices significantly as it takes a harder look at costs. The prices of some commodities used in Amazon devices, such as memory and displays, has increased, and those could get passed along to consumers, he said. But generally Amazon’s hardware business model remains the same, Limp said.

“We try to sell our products roughly at break-even, sometimes a little bit more,” Limp said. “Then, as customers use them, say they shop from their Alexa, that benefits all of Amazon, and gives the customer a great shopping experience, and that’s how we want to monetize these things moving forward.”

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