Big Tech powers down devices as economy sputters
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Illustration: Aïda Amer/Axios
Tech giants are ditching several consumer device product lines as dark economic forecasts make cost-cutting a priority.
The big picture: Tech’s biggest bear market in two decades has spurred tens of thousands of layoffs and plummeting stock prices, as companies scramble to find ways to minimize the downturn’s long-term impact.
What’s happening: Amazon's reported plan to lay off about 10,000 workers, per the New York Times, will involve cuts to the retail giant’s devices organization, which covers "Kindle, Alexa, Fire tablets, Fire TV, Echo, Astro, Ring, Blink, Halo, and Luna" (per an Amazon jobs site), as well as cuts in retail and human resources.
- The Wall Street Journal said last week that internal documents showed Amazon’s devices unit had an operating loss of more than $5 billion a year.
Over at Meta, last week executives said the giant was shutting down its Portal smart display platform and smartwatch projects.
Google canceled its next Pixelbook laptop in September and scuttled the team that was building it.
Of note: The trimmed devices are outside of each company's core or flagship businesses, which means the companies are scaling back some of their efforts to find growth in new markets.
Meanwhile, other large tech platforms are similarly retreating from some device projects.
- In August, Snap announced that it would halt development of its camera drone Pixy, which it first announced in April.
- And in July, Spotify killed its Car Thing device, which it had announced earlier this year.
The intrigue: The two oldest companies in the Big Tech club, Apple and Microsoft, have yet to publicly announce any device initiative cuts and continue to update existing lines.
- Apple’s incremental roll out of device upgrades has continued like clockwork through 2022, which also saw the company release the high-end Apple Watch Ultra.
- At its Surface event last month, Microsoft announced an updated Surface laptop, Surface Studio and a Surface tablet.
Amazon and Meta chased new devices in part out of a hope to build new platforms beyond the reach of Apple and Google, which dominate the smartphone world.
- But neither has been able to expand these new device categories beyond niche audiences.
With Meta’s push to build the metaverse, it has leaned more into being a hardware company than ever before.
- It’s not just VR headsets —CEO Mark Zuckerberg has touted AR devices, wrist controllers and neural interfaces.
- Portal may simply not have fit into the metaverse roadmap.
Yes, but: The video game industry is still all in on exploring ancillary consumer devices outside of core consoles.
- Sony is expecting to release its PlayStation VR 2, which will cost more than the PlayStation 5 required to run it, in February.
- Valve has continued expanding upon its niche Steam Deck handheld device, released earlier this year, with a dock peripheral.
Our thought bubble: Device cuts are all about belt-tightening, but they also may reflect a saturated gadget market that was overdue for some culling.
Editor's note: This story has been corrected to indicate that Amazon's job cuts will reportedly fall not only on its devices unit but also on other parts of the company.
