Amazon Alexa is a “colossal failure,” on pace to lose $10 billion this year
Yes, Apple HomePods are expensive. Well, hardware is expensive and you can’t sell devices at a loss for a decade. Let that sink in.
Ron Amedeo for Ars Technician:
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.
Yes, Apple HomePods are expensive. Well, hardware is expensive and you can’t sell devices at a loss for a decade. Let that sink in.
If you look and compare at the two devices and their business models. Apple’s Siri is always at the heart of Apple devices and it makes all of their devices better and accessible. At the end Siri is part of Apples OS strategy.
Amazon echo on the other hand, I have no idea what is their business strategy. In the last 8 years of owning an echo dot, I have used it to set timers and occasionally my 9 year old has played jingles, songs and asked for help solving addition and subtraction problems.
Not once have we as a family ordered anything from Amazon using echo. And that was the big strategy behind Amazon Echo. I would love to see a product managers KPI dashboard for this product. Here is the thing, I use my iPhone 100% of the time to buy things on Amazon. If they could spend those billions of dollars to build a better iOS app, that would have paid better dividends.