Report: Amazon Alexa Is a ‘Colossal Failure’ on Pace to Lose $10 Billion This Year

Ron Amadeo, writing for Ars Technica:

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.

It’s enough to make you think that HomePods aren’t expensive; it’s just that Alexa devices have been sold at a loss over the years. Also interesting that Siri (with some justification) has always been considered the worst of the big three voice assistants, and that it was held back technically (compared to Alexa and Google Assistant) by Apple’s commitment to privacy and on-device processing. The thing about Siri is that it was always at heart about making Apple’s platforms more accessible. Siri is there to make iPhones, iPads, Macs, Apple TVs, Apple Watches, and even AirPods better. And Apple isn’t losing money on any of those. Siri will serve the same purpose on future platforms from Apple, too. Apple’s investments in Siri are part and parcel investments in their OS strategy for everything they make.

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. That never made sense to me. Buying stuff via voice commands seems inherently uncertain — like buying a lottery ticket where you need some luck to actually get the product you think you told Alexa to buy. Even if it works, how is it any better than just shopping at Amazon on your phone, iPad, or computer? It seems worse to me, and no more convenient. How do you comparison shop via voice?

For any task X on a new platform, if doing X is not far easier than just doing X on your phone, X is never going to be a reason to use that new platform.

★ Tuesday, 22 November 2022