Report: Amazon Reorgs Lab126 Amid Fire Phone Flop

Amazon (AMZN) reportedly has overhauled its Silicon Valley-based research and development Lab126 operation, in the wake of its Fire Phone flop and Q3 $170 million writedown for weak sales and unsold inventory of the smartphone.

In the past few months, a number of top executives have exited the unit while others have been reassigned, according to a new Fast Company report detailing the reorganization. Following Lab126’s digital products vice president and Fire TV and Echo project head Malachy Moynihan’s exit, Ian Freed, Amazon’s devices vice president who oversaw Fire Phone market, left on sabbatical with his future at the unit unclear, the report said. Lab126 president Gregg Zehr has placed David Foster, who previously handled the Kindle line, in control of an advanced technologies group exploring new products. And, engineering vice president Lindo St. Angel now is responsible for developing existing products at Lab126.

In addition, Jon McCormack, Amazon’s Lab126 Kindle software vice president at Lab126 also recently departed for Yahoo (YHOO), the report said.

Despite the proximity of Lab126’s reshuffling to the Fire Phone’s disappointing performance, the two might not be as closely related as appears on the surface. Some of Fast Company’s sources contend that the unit’s makeover was long overdue, with too many siloed projects dragging down operational efficiencies and pace of development.

As for Amazon chief executive Jeff Bezos, he’s said to be enthused about the Lab126 makeover, telling staffers that the Fire Phone flap provided some valuable lessons and that the management changes will help the unit toward its goal of moving products from the idea stage to market in only a few months, mirroring the speed and agility of Amazon’s retail side.

Lab126, founded in 2004, has come out of the shadows of late, with word surfacing in September that Amazon plans to pour some $55 million into the operation, recruiting developers to work on new smart home automation projects and boosting overall employment at two facilities by some 800 people over the next five years.

The California Governor’s Office of Business and Economic Development granted Amazon a $1.2 million tax credit by the state for the unit’s expansion, said to be targeted at a headcount total of 3,750 staffers.