Amazon Alexa to Lose $10 Billion This Year
Amazon is going through the biggest layoffs in the company’s history right now, with a plan to eliminate some 10,000 jobs. One of the areas hit hardest is the Amazon Alexa voice assistant unit, which is apparently falling out of favor at the e-commerce giant. That’s according to a report from Business Insider, which details “the swift downfall of the voice assistant and Amazon’s larger hardware division.”
Alexa has been around for 10 years and has been a trailblazing voice assistant that was copied quite a bit by Google and Apple. Alexa never managed to create an ongoing revenue stream, though, so Alexa doesn’t really make any money. The Alexa division is part of the “Worldwide Digital” group along with Amazon Prime video, and Business Insider says that division lost $3 billion in just the first quarter of 2022, with “the vast majority” of the losses blamed on Alexa.
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Just about every plan to monetize Alexa has failed, with one former employee calling Alexa “a colossal failure of imagination,” and “a wasted opportunity.”
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The report says that while Alexa’s Echo line is among the “best-selling items on Amazon, most of the devices sold at cost.”
It’s not clear to me how it’s losing so much money if they’re selling the hardware at cost. Are they spending that much on the associated employees and server resources?
Via John Gruber:
What is (was?) Alexa about, strategically? I’ve often heard that the vague idea was that people would buy Alexa devices for obvious stuff (playing music, setting timers) but that eventually they’d starting using Alexa to buy stuff from Amazon — and thus wind up buying more stuff from Amazon than they would if they didn’t have an Alexa device in their house.
I find Alexa kind of annoying because it’s always trying to sell us stuff. The product recommendations are unhelpful, and we don’t want to subscribe to anything beyond Prime. But we keep using it because for basic questions, kitchen timers, and free music it works so much better than Siri.
Internally, the team worried about the quality of user engagements. By then Alexa was getting a billion interactions per week, but most of those conversations were trivial, commands to play music or ask about the weather. That meant less opportunities to monetize. Amazon can’t make money from Alexa telling you the weather — and playing music through the Echo only gives Amazon a small piece of the proceeds.
We are often told technology companies are reinventing the way many of us will purchase products, but I do not buy that narrative.
Previously:
There was an issue with my WiFi so my kitchen Google home mini stopped working for a couple of days.
Made me realize how much I use it, and how I wouldn't go back to a combo of non voice controlled radio and timer.
If it broke I would replace it with another Google home mini. But others than doing trivial kitchen tasks I'm not using it for much. Definitely not shopping.