Seattle’s Hardware Slump: AI Takes Center Stage
When Amazon executives unveiled the latest iteration of Alexa in New York last month, a noticeable absence captured attention: no accompanying new hardware. This mirrors a broader trend, as major tech companies increasingly prioritize artificial intelligence software over innovative hardware development.
Liam Pingree, an engineer with experience at Amazon, Microsoft, and Boeing, observes a slowdown in hardware risk-taking. “It’s napping,” he said, reflecting concern shared by other hardware veterans as billions of dollars are funneled into AI software.
Tech companies are betting on AI to generate new revenue streams, and historically, new products drive customer adoption. Smartphones spawned an app ecosystem, and the personal computer propelled the internet’s spread. However, the role of purpose-built gadgets for AI remains undefined. Interactions with AI often occur through older equipment, like laptop browser tabs with ChatGPT or voice-activated phone searches.
The ill-fated wearable pin from Humane Inc., designed to diminish smartphone reliance, is a prime example of an ambitious AI-focused product that failed. The company was acquired by HP in February.
Seattle’s Hardware Downturn
The shift has particularly impacted Seattle. The city’s tech giants, Amazon and Microsoft, once invested heavily in hardware innovation, but both have cut jobs in their hardware divisions since late 2022 as part of industry-wide layoffs. Mechanical and electrical engineers, product managers, and marketers report a lack of recovery in the local hardware scene.
Data from Lightcast reveals that job postings for computer hardware engineers in the Seattle area this winter hit their lowest point in any three-month period since 2017. This situation affects underemployed product designers and the industrial design firms and prototyping shops that once thrived on major engineering projects.
According to product designer Beau Oyler, who has collaborated with Amazon, LG, and Samsung, “The dollars and bandwidth and innovation are going toward AI, which doesn’t go into devices well right now.” His firm, Enlisted Design, has reduced staff due to a decrease in business from consumer electronics companies. “It’s a bloodbath out there.”
Seattle’s history is rooted in business software, as the headquarters of Microsoft and Amazon’s cloud-computing division are both located there. However, approximately a decade back, the area became a hub for innovative engineering products intending to revolutionize computing. Amazon revealed Alexa and its initial Echo smart speaker in the fall of 2014. Over the subsequent five years, Amazon introduced nearly 60 Echo devices and related gadgets, which involved thousands of employees at Amazon and at contract manufacturing firms and their suppliers. Concurrently, Microsoft launched HoloLens, an augmented reality headset that projects images into the wearer’s field of vision and began to invest more money into an increasingly high-end Surface PC lineup.
While the Amazon devices sold millions of units, the company failed to establish a profitable business model capable of sustaining such experimentation. Amazon’s original devices unit was among the first hit by layoffs when Andy Jassy took over as CEO and started cost-cutting strategies. Amazon executives have stated that, despite this, the company will continue supporting hardware development, even if the scope of hardware projects is scaled back.
Daniel Rausch, an Amazon vice president and the head of the Echo and Alexa product lines, said in a recent interview, “We are taking a very intentional view of our hardware road maps and what’s the best, highest-value hardware we can deliver for customers.”
Pingree, who departed Amazon in 2022, was involved in projects like autonomous warehouse robots and drones. He realized that executives were not keen on backing the ambitious engineering programs he wanted to work on. He then joined Microsoft to lead a HoloLens engineering team only to be tasked with dismantling the same team as the company cut back on its aspirations for the project. After doing some consulting and startup work, he has returned to Boeing, where he began his career 17 years ago, working under another Microsoft alumnus.
“This region had really built a strong, collaborative, entrepreneurial kind of engineering base,” Pingree said. “And that’s not sought after at the moment.”
Microsoft divested itself of HoloLens last month. The company sold its stake in a U.S. Army testing program to Anduril Industries, a defense contracting startup. According to a source familiar with the deal, around 250 of the approximately 350 people involved in the project took positions at Anduril, while roughly 50 were reassigned within Microsoft and a similar number were laid off.
Stacy Saal, who runs Jelly Collective, a startup incubation studio, and spent several years at Amazon, said, “You’ve got these pockets of drones and military and defense hardware, but I don’t know anybody that is pushing deep and hard into consumer hardware right now.”
Some hardware engineers in Seattle and across the U.S. are placing their hopes on commercial space ventures as tech billionaires and millionaires pursue rocket engines and constellations of satellites. Amazon’s Project Kuiper satellite internet recently showed more than 500 open jobs on the company’s job board, surpassing listings for hardware engineers in the consumer electronics division.
However, the space business is not immune to cuts. Blue Origin, Amazon founder Jeff Bezos’ rocket venture, announced layoffs last month.
Executives suggest AI hardware is forthcoming, though its form is uncertain, with possible refinements to existing products like smartphones and smart speakers or another venture at a device akin to Humane. Some companies are also exploring humanoid robots using advancements in large language models.
During a recent event in Manhattan, Amazon devices chief Panos Panay and other executives demonstrated the new Alexa using a 21-inch Echo Show. The device, launched last fall, has a setup that is similar in appearance and functionality to the original devices introduced in 2017. Panay mentioned in a post-event interview that there is “an entirely new wave of hardware” coming, but refrained from elaborating on the product road map.
