Amazon is rethinking its hardware ambitions because of the Fire Phone

Amazon.com Inc. flamed out with critics and consumers last year in its first attempt at a smartphone. Now, rather than forge ahead, as it has with other projects, such as its Kindle tablets, the online retailer is retrenching. In recent weeks Amazon has dismissed dozens of engineers who worked on its Fire phone at Lab126, its secretive hardware-development center in Silicon Valley, according to people familiar with the matter. The layoffs were the first in the division’s 11-year history, these people said. But the precise toll on its roughly 3,000-person staff couldn’t be learned, in part because Amazon typically requires employees to sign a nondisclosure agreement in exchange for severance payments. The company also has scaled back or halted some of Lab126’s more ambitious projects—including a large-screen tablet—and reorganized the division, combining two hardware units there into one, people familiar with the matter said. Amazon declined to comment for this article.