Amazon sacks engineers after Fire Phone flop

Amazon's ill-fated foray into smartphone territory with the Fire Phone looks to have had serious repercussions, as the company has allegedly decided to lay off dozens of engineers and curb development of future hardware products.

According to The Wall Street Journal, Amazon has enforced a series of cuts at its hardware-development centre, Lab126, in Silicon Valley. A number of engineers have reportedly been fired and progress on several projects, including an unnamed large-screen tablet and smart stylus, has been halted.

Lab126 was established in 2004 to develop Amazon's Kindle e-reader. It has since expanded into development of everything from Fire tablets, Fire TV streaming boxes, Dash buttons and the Fire Phone.

News of cutbacks would seem to signal a reshuffling on Amazon's behalf away from such multifaceted hardware development, at least in terms of the smartphone market.

The Wall Street Journal claims that Lab126 employees have been suffering from low morale since the commercial failure of the Fire Phone. The phone was lambasted for its steep US$650 SIM-free price tag.

Harsh price cuts saw that price drop to 99 cents in the US, but it wasn't enough to drive up sales, and in October last year Amazon was forced to take a US$170 million charge largely for unsold inventory.

The bad news comes in the wake of the departure of Amazon's leading engineer, Jon McCormack, who left the company to work for Google earlier this month.

While the cuts will raise questions about Amazon's position in the hardware market, it's not all doom and gloom at Lab126. The Kindle Paperwhite has been well received and the Echo has been going down well in the US.

The restructuring could therefore be a good thing for the company – presenting an opportunity to reign in an unruly hardware strategy and focus on developing products it excels at – namely e-readers and Internet of Things devices.

The Fire Phone is dead. Long live the Kindle.