*It’ll be a shock if Alexa is killed, because this was the one alleged consumer mega-hit of the Internet-of-Things smart home.
https://arstechnica.com/gadgets/2022/11/amazon-alexa-is-a-colossal-failure-on-pace-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. That is apparently double the losses of any other division, and the report says the hardware team is on pace to lose $10 billion this year. It sounds like Amazon is tired of burning through all that cash.
The BI report spoke with “a dozen current and former employees on the company’s hardware team,” who described “a division in crisis.” Just about every plan to monetize Alexa has failed, with one former employee calling Alexa “a colossal failure of imagination,” and “a wasted opportunity.” This month’s layoffs are the end result of years of trying to turn things around. Alexa was given a huge runway at the company, back when it was reportedly the “pet project” of former CEO Jeff Bezos. An all-hands crisis meeting took place in 2019 to try to turn the monetization problem around, but that was fruitless. By late 2019, Alexa saw a hiring freeze, and Bezos started to lose interest in the project around 2020. Of course, Amazon now has an entirely new CEO, Andy Jassy, who apparently isn’t as interested in protecting Alexa.
The report says that while Alexa’s Echo line is among the “best-selling items on Amazon, most of the devices sold at cost.” One internal document described the business model by saying, “We want to make money when people use our devices, not when they buy our devices.”
That plan never really materialized, though. It’s not like Alexa plays ad breaks after you use it, so the hope was that people would buy things on Amazon via their voice. Not many people want to trust an AI with spending their money or buying an item without seeing a picture or reading reviews. The report says that by year four of the Alexa experiment, “Alexa was getting a billion interactions a week, but most of those conversations were trivial commands to play music or ask about the weather.” Those questions aren’t monetizable….
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