Amazon.com Inc is reviewing its unproductive businesses, including the devices section that houses voice assistant Alexa, in order to slash expenses, according to the Wall Street Journal on Thursday, pushing its shares up 11%.
Following a months-long evaluation, Amazon has told employees in some unproductive departments to look for work elsewhere within the firm, while redeploying people from specific teams to more profitable sectors and closing teams in areas such as robotics and retail, according to the Wall Street Journal.
Eyes on Alexa business
According to the source, Amazon is closely analyzing its Alexa business and is presently debating whether it should focus on trying to add new features to the voice assistant, which is available on a number of Amazon devices. According to the research, adding capabilities would necessitate a larger expenditure, and many users use the gadget for only a few purposes.
As per the data obtained by the WSJ, the unit that houses Alexa has an annual operational deficit of more than $5 billion. “Of course, we’re examining options to minimize expenses while taking into consideration present macro-environment,” Amazon spokesperson Brad Glasser said.
Glasser stated that Amazon is “optimistic about Alexa’s future” because it is a major business and area of investment for the corporation. The announcement comes only weeks after Amazon warned of a slowdown in growth for the crucial holiday season, when it generates the most sales, citing inflation-conscious customers and businesses as having less money to spend.
Amazon announced last week that it would halt corporate employee hiring for the next three months owing to an “unusual macroeconomic situation. Amazon can no longer afford to experiment and run with too many items that don’t yield a return,” GlobalData analyst Neil Saunders said.
More than 35 smart speaker models have now been retired (as of April 2022), 46 brands have not produced a new smart speaker since 2019, and 34 firms have not published a new smart speaker since 2018. Although Amazon-branded smart speakers increased 33% year on year in the second quarter (Q2), other brands such as Google and Apple decreased by 31% and 57%, respectively, according to global market research firm Omdia.
According to the report, the company has over 10,000 employees and is a key recipient of investment funds. Amazon’s cost-cutting strategy parallels that of IT behemoth Meta Platforms Inc, which announced on Wednesday that it will lay off 13% of its workers, while other tech behemoths such as Alphabet have also halted hiring.
On November 9, Facebook-parent Meta Platforms announced the layoff of approximately 11,000 employees, accounting for nearly 13% of its overall workforce. The corporation is also planning to extend the employment freeze it has in place.
In recent days, the social media site Twitter has laid off almost 3,700 people. According to the company’s new CEO, Elon Musk, the change is necessary to reduce the “loss of $4 million per day” that it is now experiencing.
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