Amazon devices chief downplays smartphone ambitions amid profitability push
The executive responsible for Amazon’s hardware division says developing a new phone is not the company’s priority, as leadership focuses on driving service usage and turning around the devices unit’s financial performance.
Panos Panay, Amazon’s head of devices and services, has stated that developing a new smartphone is not the company’s current objective, effectively downplaying persistent market speculation regarding a codenamed ‘Transformer’ device. The comments, made in an interview with the Financial Times, address reports from March that Amazon was exploring the use of Alexa as an operating system for a new mobile phone to promote its artificial intelligence capabilities. Panay described the notion of releasing a new handset as “just not the goal,” noting that there is currently no clear strategic path that justifies such a move.
The executive pointed to the historical precedent of Amazon’s 2014 Fire Phone, which was discontinued after a single year due to poor sales, as a cautionary tale. Panay, who previously worked on Microsoft’s Surface Duo, emphasised that the company has learned from past mistakes. He stated that Amazon now understands what customers need and will not return to the market with a product simply to gauge interest. Instead, the focus remains on other form factors and driving profitability within the existing devices unit, rather than engaging in a direct competition with established giants like Apple and Samsung.
Financial pressures within the hardware division have been significant. According to reports cited by Panay, Amazon’s devices unit incurred losses of $25 billion between 2017 and 2021, while the Alexa division was projected to lose $10 billion in 2022. These figures underscore the extreme pressure on the devices business to demonstrate value and achieve profitability. Panay acknowledged that releasing a new smartphone would represent a substantial risk for a department already tasked with turning a corner financially.
Amazon CEO Andy Jassy has directed Panay to ensure that devices become one of the company’s next major growth areas. However, this mandate is focused on increasing the usage of existing hardware to drive engagement with Amazon’s core services, such as Amazon Music and the shopping platform. Panay clarified that while he would not rule out a smartphone entirely in the distant future, a definitive “no” would be misleading. He stressed that the company needs to make big bets only when a viable path exists, and currently, a mobile device does not fit that criteria.
The devices chief reiterated that the primary objective is to make the business profitable. By leveraging existing devices to deepen customer engagement with Amazon’s ecosystem, the company aims to stabilise its hardware operations without incurring the high costs and risks associated with entering the saturated smartphone market. This strategy aligns with a broader shift towards monetising service usage rather than pursuing hardware expansion for its own sake.
