Amazon may lose $10 billion this year due to Alexa voice assistant
Like many others, these are not the best times for Amazon. This is what the plans of the company to lay off approximately 10,000 employees say. The virtual “employee” of the company is also not feeling very well this year. Some of the layoffs in the company will also be in the Alexa department.
In its 10 years of existence, the voice assistant Alexa has not managed to create a steady stream of income. This division is part of the Worldwide Digital group along with Amazon Prime. Their losses in the first quarter of this year amounted to $3 billion, and the vast majority was on Alexa. That’s twice the losses of any other division of the company.
Business Insider talked to a dozen current and former employees who described the “crisis” state of the unit. One called Alexa a “colossal failure of imagination” and a “missed opportunity.” And yet the massive layoffs will be the result of years of trying to save the day.
In 2019, the company held a crisis meeting, which was a futile attempt to save the situation. At the end of the same year, you could see that the project froze the hiring of new employees, after which Jeff Bezos began to lose interest in Alexa. The company’s new CEO, Andy Jassy, will especially not come to its defense.
Despite the fact that the Amazon Echo is one of the best-selling products on Amazon, most of these devices are sold at cost. It was Alexa which had to “bring a penny” in this business model:
We want to make money when people use our devices, not when they buy our devices.
But that didn’t happen. As it turned out, users are not very willing to spend money through a virtual interlocutor. Traditionally, they prefer to see product images, reviews, etc., before purchasing something. At the same time, Alexa was still contacted. Even in its fourth year, Alexa was being asked a billion times a week, but mostly for simple commands to play music or read the weather, which weren’t monetized.
The company’s cooperation with partners did not help Alexa either. The voice assistant could call an Uber or order a pizza from Dominos. The company received its fortune from such requests. Probably not so big.
It is reported that the company currently does not have a clear position on the future of gadgets. At the same time, according to Business Insider, Alexa does not hold up so badly against the background of competitors in the USA: Google Assistant has 81.5 million users, Apple’s Siri – 77.6 million, Alexa – 71.6 million.