When Amazon.com Inc. ran its devices division in 2023, employing longtime Microsoft Corp. product chief Panos Panay, his new colleague thought the e-commerce giant was preparing to make its line of consumer gadgets advanced.
Panay pushed the idea back during an all-hand meeting with thousands of engineers from the Alexa, Echo and Fire TV brands. However, his vision for the business did not become a more clear focus until this week when the executive unveiled a series of new products at an event in New York. Message: Panay aims to build devices that people want to use at all prices, in their homes and at their own price. “The idea puts a lot of details on every product,” he said in an interview.
Most new devices, including updated smart speakers, e-readers, home security tools, TV accessories and other products, have higher prices, but the company's more affordable products are just as important. “A superpower designed for cost is a very rare talent,” he said. “You just have to pin it, and now you're making great products and when you can serve everyone, that's how we can impact the world.”
Former Microsoft top designer Ralf Groene reiterates his feelings as he came out of retirement to become head of design on Amazon earlier this year. “There's a lot of refinement in this material, but I don't want to be like, 'Oh, it's so refined.' It needs to blend in. “He compares to not noticing your shoes when you run. Or, when you play the guitar and “just get hooked on music,” Groene said.
Panay is excited about Amazon's smooth-looking new Echo speakers and Kindle's e-reader, but he speaks most proudly about his latest $40 4K Fire TV Stick. Its products have a new operating system that improves speed and performance with “the cheapest possible 4K devices.”
“In my mind, it's a great product,” Panay said.
Still, creating more premium hardware (what Panay calls the “signature” line) to generate higher profit margins is also a key part of the goal. Amazon's hardware division has long been seen as a leader in losses. This is the real money from subscriptions and purchases made through Alexa Voice Assistant. Panay disputes that view. The whole department continues to lose money, but some product lines are profitable and others are heading in that direction, he said.
Panay also oversees Amazon's efforts, oversees Alexa and devices. These include pushing to the satellite internet via Project Kuiper and self-driving cars using Zoox. In recent years, profit impulses have become a priority for the group as CEO Andy Jussy seeks to reduce costs and reform units that sometimes operated as boundary labs.
“My idea is that our job is to make the device the next big company on Amazon,” Panay said. To achieve that and continue building an organization, he said, he needs to pull a certain lever to make the business more successful.
Improved devices may be useful. Apart from the Fire TV sticks, most of the new Amazon branded hardware is at higher prices. For example, the latest Echo Show 8 is $80 more than the current model. And the new coloured Kindle Scribe is the most expensive Amazon e-reader for around $200. At these higher prices, you're also getting a much better product, Panay said. However, there are no overhauls built around high-end metals or the world's most expensive fabrics.
“The first conversion is to promote these products to the next generation,” Panay said. “That's just the beginning.”
Top leaders in his division met every Thursday for discussion on confidential plans, and they created a roadmap for the next three years of products, Panay said. The key first step was to release an artificial intelligence-fueled version of Alexa+, the voice assistant for Amazon, a rollout that began in March. This sets the stage for device strategies. “The amazing product has been even better through ambient AI,” Panay said.
Alexa+ can run on Amazon gadgets that go back more than five years ago, but the latest hardware can first include systems that are already installed. The device also has new features. The updated echo show – smart speaker with screen – combines AI and sensors to find out who's approaching the device. Then you can quickly display people's preferences and provide tailored podcasts and photos. Kindle, on the other hand, can help you upload user notes to satisfy Alexa queries created on the speaker.
The company is now confident enough to include Alexa+ as the default option for new devices, but the rollout wasn't completely smooth. Users complain about slow deployment, broken compatibility with some appliances, and misleading commands for the system. Still, all the Panays are in it.
“This is not an easy transition,” he said. Because hundreds of millions of people use the current version. Still, “The Alexa+ home is probably the most exciting home product I've ever seen,” he said.
Amazon already has millions of double digit users running the new Alexa. This offers $20 a month or a free Prime subscription, but the company is working hard to improve it. “Everyone would want to use it,” he said.
Daniel Rausch, Panay's aide in charge of Alexa and Echo, said the results were already promising. The new interface boasts 2-3 times more usage than the old school Alexa, for those who have it. (Normal Alexa still has hundreds of millions of users).
In a world where people are glued to smartphones and computer displays, Panay wants to guide Amazon users in other directions. This means creating AI devices that run in the background and run less screen time.
But they're chasing their dreams with Apple, Alphabet Inc.'s Google, Meta Platforms Inc. and others. Panay's predecessor, Dave Limp, was also exploring ideas on Amazon.
To be a true competitor in this market, Amazon will ultimately need to crack the code on its mobile device. Ten years ago, when Panay designed a Tablet-Laptop hybrid, I tried it on a Fire Phone and failed. The company is working on future earphones and smart glasses that leverage Alexa, but the real victory will be a whole new one built and portable around AI.
“A whole paradigm shift in user interfaces is coming, and I think the way people interact with their devices is being challenged,” Panay said. “I have a strong belief in ambient AI and can talk to you about anything. Please have that conversation anytime, whenever you want.
To help, Amazon acquired a startup called Bee in August. The company has developed wristbands that can record people's days and send a summary to users on the phone app. Amazon didn't discuss the idea for the product announced Tuesday, but it aims to eventually update the device and tie it to Alexa+.
To rebuild Amazon's hardware group, Panay brought collaborators from Microsoft Days and Amazon's own veterans. The team includes Aidan Marcuss, who worked for Windows until last year, and is now heading Amazon's television business. Additionally, Xbox co-inventor J Allard is currently leading a team focused on new form factors. Meanwhile, ring creator Jamie Siminoff returned earlier this year. Perhaps the most important addition is the German-born Gro Garden, who left his role as Microsoft when Panay left.
When Groene joined Amazon eight months ago, his first business order brought all the designers of the company, across hardware, software and user experience, under one roof. This created a structure similar to the way Apple develops its products.
Before the shift, the design was implemented by individual product managers per product. This structure allowed for efficient product creation, but there were silos that prevented teams from building on each other's achievements, Groene said. It also produced a slate of almost utilitarian products, with the exception of the Amazon Smile logo, that share little common design characteristics.
Two other major changes: design from day one of the product processes and making rapid prototyping a core part of development. Rausch, who has worked at Amazon's Devices Division since 2009, said the biggest change was the collaboration between sketch artists, prototypes, materials scientists and engineers from the start.
“If you put it all together faster, it's even better by repeating the product faster and setting the bar faster,” he said.
Amazon is launching a new product a few weeks after Apple launched its new iPhone. This proves that decades-old form factors remain here. Meanwhile, Meta released new smart glasses with displays earlier this month, indicating that non-Apple companies are enthusiastic and can introduce devices in a whole new category.
Openai also looks likely to be a candidate for mobile hardware. Former apple designer Jony Ive is working on a new, AI-centric gadget.
To become a true leader in devices, Amazon will need breakthroughs that exceed its current lineup. You also need to convince users that Alexa+ and its AI are worth paying to avoid going back or downgrade to older versions of Alexa. Either way, it will take years for the company's strategy to take shape, Groene said.
“It's a real journey,” he said. “In 12 months, the story can take a step further, but it's still not the big picture. It takes time.”
Garman writes for Bloomberg.
