Amazon restructures hardware R&D group Lab126 after Fire Phone flop

6 Jan 2015

The flop of Amazon’s Fire Phone has prompted CEO Jeff Bezos to instigate changes at its hardware R&D group Lab126 to make it more nimble, focused and capable of creating hardware consumers will buy.

It is a time of massive upheaval in the mobile manufacturing space, with players like Xiaomi emerging fast and furious with attractive, simple devices that are selling by the wagonload.

You would have thought that it would have been a no-brainer for a company with the sales and marketing clout of Amazon to develop a device that would be elegant, practical and affordable.

However Lab126, the group that developed breakthrough devices like the simple and elegant Kindle e-reader, has emerged a case study for what could happen when R&D runs away with itself.

According to reports long overdue changes have been implemented at the group which has been described as “bloated” and focused on “inexplicable” technologies.

Amazon was recently forced to swallow a US$170m write-down for unsold inventory related to the Fire Phone.

While restructuring has been steadily occurring in recent weeks and months, Lab126 will remain Amazon’s innovation engine and one that Bezos believes will be capable of taking products from idea to reality in a matter of months.

The group began as a feisty skunkworks team with bold ambition but had grown into a secretive organisation that has over 3,000 employees.

It’s all to play for in consumer electronics

Senior leadership departures and redundancies have followed, according to Fast Company which investigated the organisation, and CEO Jeff Bezos is intent on doubling down on efforts to make Amazon a leading player in the consumer electronics space.

In particular he has his sights on Apple and Google and believes Amazon has the infrastructure and the market clout to defeat them in areas that range from mobile devices to the smart home and internet of things.

It is understood the restructure began months ago following the departure of Lab126’s leader of Fire TV and Echo products Malachy Moynihan as well as Amazon’s VP of devices Ian Freed who has gone on sabbatical.

New leadership at Lab126 include Dave Foster who will take charge of the R&D group’s advanced technologies group and Lindo St Angel who will take charge of engineering and shipping of existing technologies.

It is understood that Bezos is philosophical about the experience and, after venting his frustration through restructures and reshuffles, believes important lessons have been learnt.

It will be interesting to see what devices emerge from Lab126 and enter the Amazon ecosystem in the years ahead.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years