Amazon Reworks Hardware Plans After Fire Phone

The giant retailer reportedly is shedding some device plans and laying off engineers after last year's Fire smartphone failed in the market.

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Amazon's unsuccessful venture into the highly competitive smartphone space last year with the ill-fated Fire phone reportedly is leading the massive online retailer to scale back or stop development of other hardware efforts and to cut jobs in its secretive development center.

According to a report this week in The Wall Street Journal, Amazon officials are putting aside plans for other phones as well as such products as a 14-inch tablet dubbed Project Cairo, a smart stylus called Nitro that is designed to translate notes into digital shopping lists, and Shimmer, a projector. However, some other projects, including a kitchen computer code-named Kabinet that will play a central role in future smart homes, are still moving forward.

That said, they'll have to move forward without some of the engineers in Lab126, the Silicon Valley center where Amazon developed such products as the Kindle Fire tablet, Kindle e-reader, the Dash button and the Fire smartphone. According to the report in The Journal, the company has laid off dozens of engineers over the past few weeks, reportedly the first time in the 11-year history of Lab126 that jobs have been cut.

Amazon officials declined to comment to media outlets on the report.

The company, building off the success of the Kindle and Kindle Fire, saw the Fire phone as a way to enter into the smartphone space, compete with the likes of Apple (with its iPhone lineup) and Samsung (Galaxy devices), and give customers yet another way to order products from the e-tailer online.

While the device—which included Amazon's own forked version of Google's Android that was called Fire OS—was introduced with a heavy marketing campaign, it never caught on with consumers. There were a range of challenges, from the ongoing popularity of the iPhones to high prices to an array of other devices on the market, particularly at AT&T, which was the exclusive retailer for the Fire phone.

Several months after its launch, Amazon announced it was taking a $170 million charge to write down the costs associated with the Fire phone. At the same time, company officials said that there were still $83 million worth of unsold Fire phones, which forced Amazon to drastically drop the price for the smartphone and served as an illustration of the poor reception the device had in the market.

The future of phone development at Amazon is still unclear. Some Amazon engineers told Wall Street Journal reporters that work on a new smartphone was being put aside, while others said the work was being sent to Amazon's Seattle, Wash., facilities.

However, Amazon still intends to compete with the Apples and Samsungs of the world in the Internet of things (IoT) and other areas, according to sources. The Kabinet, which will be able to take voice commands, is an example of where Amazon sees value in the increasingly important connected home space. In addition, the company reportedly is working on a tablet that will offer glasses-free 3D capabilities and a Kindle battery that would last up to two years on a single charge.

The report regarding Lab126 comes on the heels of a story in The New York Times that spoke about the harsh corporate culture and working conditions at Amazon. The piece drove Amazon CEO Jeff Bezos to write a company-wide email defending the company and criticizing the newspaper's reporting.

"The article doesn't describe the Amazon I know or the caring Amazonians I work with every day," Bezos wrote. "Hopefully, you don't recognize the company described. Hopefully, you're having fun working with a bunch of brilliant teammates, helping invent the future, and laughing along the way."