Despite a $US170 million write down on unsold Fire Phones last year, and a recent round of layoffs at its Lab126 hardware unit, Amazon isn’t showing any signs of slowing down its hardware ambitions.
In fact, its latest earnings release was so full of hardware device mentions, it would lead many to assume Amazon’s main business is hardware.
Take the first CEO comment in the earnings release, which is usually reserved for how well the company as a whole is doing. Instead, Amazon CEO Jeff Bezos took the opportunity to advertise Amazon’s Fire tablet:
“For the first time, we’re recommending you bring home a six-pack for the whole family…At a price of $US50 for one or $US250 for a six-pack, Fire sets a new bar for what customers should expect from a low-cost tablet. This is one more step in our mission to bring customers premium products at non-premium prices. Fire is the #1 best-selling product on Amazon.com since launch, and based on the strength of the customer response, we are building millions more than we’d already planned.”
Amazon doesn’t break out the its sales on individual products, so we’ll have no clue how many tablets, or hardware devices in general, it sold in the past quarter. But Amazon CFO Brian Olsavsky vaguely explained that its tablets are selling well during a press call held shortly after the earnings report was released.
“What I will say about devices is we’re extremely excited about our roadmap. You’ve seen a lot of new products released in the last few months, new e-readers, Fire tablets, some prices as low as $US50, Fire TV and Fire TV Stick, Echo, Dash buttons, so the customers have responded really well. We’re really excited about the response, we’re going to be building millions more of the Fire tablets than we had originally planned,” Olsavsky said.
Amazon also made sure it filled up the top portion of the “highlights” segment in its earnings release with its hardware business:
- Amazon introduced four new tablets, including Fire
- Amazon introduced three new Fire TV devices
- Amazon launched Fire TV and Fire TV Stick for Japanese customers
- Alexa, the brain behind Echo, continues to get smarter with new features
- Amazon Dash Button has received an overwhelmingly positive customer response and selection continues to grow
- Amazon announced Amazon Underground, a new app for Android phones
This isn’t all that surprising, considering some of Amazon’s products, like the Fire Tablet and Kindle e-reader, are considered to be huge successes. Also, Bezos is known for experimenting with a lot of new ideas before deciding whether to scale it or shut it down.
At the same time, there have been some reports indicating Amazon’s tablet getting hit the hardest with the general tablet market shrinking in recent years.
Regardless, Amazon will likely continue to pursue more hardware businesses down the road. Bezos’ comments during an interview with Business Insider last year will give you a glimpse into his thinking:
“If you look at our device portfolio broadly, our hardware team is doing a great job. The Kindle is now on its seventh generation. The Kindle Voyage, the new premium product, is just completely killer. Fire TV, Fire TV Stick — we’re having trouble building enough. Amazon Echo, which we just launched. So there’s a lot of activity going on in our device business. With the phone, I just ask you to stay tuned.
What really matters is, companies that don’t continue to experiment, companies that don’t embrace failure, they eventually get in a desperate position where the only thing they can do is a Hail Mary bet at the very end of their corporate existence.”
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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