Amazon Alexa is a “colossal failure,” on pace to lose $10 billion this year

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.

Feds likely to challenge Microsoft’s $69 billion Activision takeover

Josh Sisco for Politico:

The Federal Trade Commission is likely to file an antitrust lawsuit to block Microsoft’s $69 billion takeover of video game giant Activision Blizzard, maker of the hit games Call of Duty and Candy Crush, according to three people with knowledge of the matter.

A lawsuit would be the FTC’s biggest move yet under Chair Lina Khan to rein in the power of the world’s largest technology companies. It would also be a major black mark for Microsoft, which has positioned itself as a white knight of sorts on antitrust issues in the tech sector after going through its own grueling regulatory antitrust battles around the world more than two decades ago.

Ok.

To a lesser extent, Google is also an opponent of the deal, according to two of the people with knowledge of the matter. The company has argued that Microsoft has purposely degraded the quality of its Game Pass subscription service when used with Google’s Chrome operating system, and owning Activision would further its incentive to do so, ultimately steering hardware sales towards Microsoft and away from Google, the people said.

Ok.

Microsoft has pledged to continue making Call of Duty available on Sony’s Playstation console, and recently made an offer to give Sony access to the game for the next 10 years.

I still can’t play any Spider-Man games on Xbox.

Apple is building an Ad (Services) Empire

It’s earnings week and so far the news hasn’t been great. However, Apple of all the tech companies has had a decent result in an otherwise terrible week for across all tech companies (so far). It’s impossible to look at Apple’s performance in a vacuum. 

Image courtesy App Economy Insights

The highlight for me during the entire earnings call was that Services now account for 33% of Apple’s gross profit and the fastest-growing segment in FY22 – up 14% YoY.

I remember hearing Apple is doomed when iPhone used to dominate its gross profit pie. That pie has been shrinking and all eyes are on the services sector.

Keep in mind this segment grew 26% YoY last year.

Image courtesy SixColors.com

Now, Apple does not give us a breakdown on its services revenue and during this call didn’t disclose anything about its advertising revenue either. When asked during the earnings call, Tim Cook simply said it was “not large”. I simply recon for how long though? 

Ekaterina Kachalova on Industry News:

Apple has always styled itself as a paragon of privacy whose profits are not ad-driven. “You are not our product. You are our customer. You are a jewel, and we care about the user experience,” Apple CEO Tim Cook famously said in 2018.

Apple continues to keep privacy in mind. Their push agains third party tracking simply makes it harder to pull personal data from applications. 

And unlike most of its high-profile competitors, Apple seemed to be walking the talk. While Apple’s ad revenue is expected to reach $5 billion this year, it pales in comparison to the ad money Google and Facebook are making. Google earned a staggering $209bn from ads alone last year and Meta crossed the $100bn threshold for the first time, raking in $115bn.

$5 billion is about a quarter of their entire services revenue. In comparison to the money Apple makes, it may not be “large” but Apple is positioned itself to take that number even higher. 

Those figures could be even higher had Apple not launched a sweeping crackdown on tracking last year. Its new privacy feature, known as App Tracking Transparency (“ATT”), required apps to seek users’ permission to track them across other applications and websites, thus making it easier than ever for users to opt out of tracking and personalized advertising — which they overwhelmingly did. Only about 25% of iOS users worldwide now explicitly let apps to track them.

Apple’s push against third party tracking is causing major problems for Meta and Google. 

Apple dealt a blow to the ability of third-party platforms to pull personal data from apps. That data is crucial to targeted advertising which Facebook relies on as its prime source of revenue. Highly personalized ads pay off way more than ads based on a random or less precise set of data, so Facebook is losing money — Apple’s anti-tracking feature is projected to cost Meta $12.8 billion this year.

Meta already has enough personal information which they can use to show ads, but its the extra metadata it gets from the app that allows them to curate this even further. I have spoken to several small business owners who have seen the benefits of facebook ads working for them.

A $12.8 billion hit is just this year but pretty sure there is more to come.

New entrants in the market could also challenge Meta and Google. Apple plans to show ads in their maps starting next year (similar to Google). Digital search is evolving across TikTok, Amazon and Instagram. When you are looking for product you turn to Amazon – that trend has been in effect for some time now.

However, according to this New York Times article TikTok and Instagram is the new search engine for Gen Z:

“In our studies, something like almost 40 percent of young people, when they’re looking for a place for lunch, they don’t go to Google Maps or Search. They go to TikTok or Instagram.”

Just when you thought at least influencers on these platforms will be spared, Apple’s new App Store tax on ads can cause some problems for these platforms as well as influencers. 

Meta’s biggest advertisers won’t feel Apple’s latest squeeze. It will be the individuals who buy one-off boosts in Instagram and Facebook that are affected the most since they’ll have to pay more for the same level of distribution, according to Eric Seufert, a respected ad industry analyst. “By inserting itself into the social media post boosting process and extracting a 30 percent fee, Apple is reducing the effectiveness of advertising spend for small businesses and influencers.”

More scoop on the latest Apple Store Tax on 9to5Mac.

To summarize, keep an eye out for the next few earnings call where you will see the Services pie growing ever so slightly. It won’t take long when the services revenue surpasses the iPhone and becomes the biggest pie.

Apple understands this space very well now after observing it for so many years. And just like the other features they have perfected in the past, they will roll out their ad platform successfully.

Recently Elon Musk published an open letter to Twitter’s advertisers:

I highlight and mention this again:

I also very much believe that advertising, when done right, can delight, entertain and inform you; it can show you a service or product or medical treatment that you never knew existed, but is right for you. For this to be true, it is essential to show Twitter users advertising that is as relevant as possible to their needs. Low relevancy ads are spam, but highly relevant ads are actually content! Fundamentally, Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise.

I don’t think we as consumers have a problem with ads. We have seen so much advertisement all around that at this point we just want them to be desirable.

More to follow.

Elon Musk’s open letter to Advertisers

I also very much believe that advertising, when done right, can delight, entertain and inform you; it can show you a service or product or medical treatment that you never knew existed, but is right for you. For this to be true, it is essential to show Twitter users advertising that is as relevant as possible to their needs. Low relevancy ads are spam, but highly relevant ads are actually content! Fundamentally, Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise.

I don’t think we as consumers have a problem with ads. We have seen so much advertisement all around that at this point we just want them to be desirable. If you are a Product manager and you have one metric, this is a good metric to have at twitter.

Apple (still) exploring iPads with larger screens

The rumor mills are buzzing again at the prospect of iPads getting even larger screen (16″). Last year Bloomberg’s Mark Gurman reported that Apple is working on iPads with larger screen. It was an interesting take but this caught my eye:

But a big iPad would be the perfect device for many people, including me, and would continue to blur the lines between tablet and laptop.

I honestly don’t think we need to bring the macOS to the iPad. We have iPadOS and between the two operating system things can get as blurry as possible and I’m absolutely fine with that but we have to keep in mind that the macOS is built for a precise pointing device like the Magic Mouse and the iPadOS is built for touch.

I had a nightmare when I had to use touch on the Windows OS. Yes people love it, but I have seen them trying to “touch” an area multiple times to get it right.

A bigger iPad can simply be a bigger iPad. I am a serious hobbyist when it coms to photography and I absolutely need my 16″ MacBook Pro when I’m editing my photographs. I occasionally retouch my photographs on the iPad but only when I have to do something quick. I know several people who would love to get a larger screen iPad for the work they do.

In my humble opinion, merging the two platforms would simply be a disaster. There is continuity now between your Mac and iPad; and it works amazingly well! That’s blurry enough for me.

User Experience (UX) Metrics for Product Managers using RUM

A while back I wrote an article about User Experience Metrics for Product Managers along with their hundred other KPI’s they keep track of. These specifically focused on how the product would perform on a user’s browser with tools like Google Puppeteer.

One of the things we product managers always want to track (and also struggle with) is how new features or services impact customers. Worst, what good product performance/experience means is never established be it web, table or mobile.

When I started out as a product manager, I didn’t even know how to benchmark user experience, but knew very well what the term user experience meant. To get a good understanding on user experience, I took up a job as a UX Designer for 3 years and although that was more focused on designing the right product for the person benchmarking or tracking any kind of UX metric was never a priority.

When pressed hard on user experience most organizations tend to solely rely on uptime and response time as two standard metrics to report on the success or failure of a new product, feature or a service.

RUM has been around ever since I started my first job (well over 20 years I recon) and the issue I fell is that people still don’t realize how best to utilize RUM.

I see product managers using RUM data to identify the different screen resolutions, or the most common browser being used and what part of the world is your user base coming from. Trust me, RUM can do a lot more than just that and provide you with valuable information about our product’s user experience and performance.

In 2020, Google announced Core Web Vitals as part of the Page Experience update. The findings that lead to these core web vitals weren’t surprising.

Speed matters – your web application should load smoothly and quickly. Jakob Nielson at the NN/g explains this very well in his article about the 3 important limits for response times.

0.1 second is about the limit for having the user feel that the system is reacting instantaneously, meaning that no special feedback is necessary except to display the result.

1.0 second is about the limit for the user’s flow of thought to stay uninterrupted, even though the user will notice the delay. Normally, no special feedback is necessary during delays of more than 0.1 but less than 1.0 second, but the user does lose the feeling of operating directly on the data.

10 seconds is about the limit for keeping the user’s attention focused on the dialogue. For longer delays, users will want to perform other tasks while waiting for the computer to finish, so they should be given feedback indicating when the computer expects to be done. Feedback during the delay is especially important if the response time is likely to be highly variable, since users will then not know what to expect.

Lets look at the three core web vitals that Google proposes:

Largest Contentful Paint (LCP): measures loading performance. To provide a good user experience, LCP should occur within 2.5 seconds of when the page first starts loading.

This is measuring your websites loading performance. How quickly your images are loading. To get a better score, make sure your images are optimized.

First Input Delay (FID): measures interactivity. To provide a good user experience, pages should have a FID of 100 milliseconds or less.

This is measuring the interactivity of your website. How quickly is your website able to accept user input. Think about it, your users are using your applications for a very long time. At a certain point they have built motor skills where they know on the browser a button or dropdown is going to be and their mouse just gravitates to that spot. Prioritizing your items to be loaded and made interactive as soon as possible will allow users to get less frustrated and improve your user experience.

Cumulative Layout Shift (CLS): measures visual stability. To provide a good user experience, pages should maintain a CLS of 0.1. or less.

Visual Stability is very important. How often has it happened when you are reading a message and suddenly the page shifts because an ad loaded and its taking up more space now. Make sure your interface is set up to incorporate for those spaces as they fill up over time.

What I like about these core web vitals is that it provides a standard benchmark. This now makes it easy for you compare your core web vital performance against this benchmark.

The core web vital measures a few things that is essential to determine the user experience. It measures

  • how fast a user can interact with your website or mobile application
  • how quickly the content loads

The quicker that image loads the better user experience and a good web vitals score. We have come along way on this internet journey. Today the user expects the content to be loaded or at least the website to be interactive in under 4 seconds. Our attention span has grown shorter over the years. Anything longer and we move on or just get frustrated with the experience.

Have you hit refresh or a link multiple times? Back in the day, after entering the url or clicking a hyperlink, you could sit back and wait until the page loaded – and that was the expected experience. Today you are guaranteed to receive a few extra key strokes or mouse clicks if things don’t load faster.

Core Web Vitals are one of the most effective way to quantify user experience. And RUM is so versatile that these metrics and data can be used by anyone in your organization – be it Product Managers, Marketing Team, Engineering or Site Reliability Engineers.

GitHub hits $1 Billion ARR

Frederic Lardionis writing for TechCrunch:

“We kept GitHub GitHub and it remains this independent entity within Microsoft similar to LinkedIn,” he told me. “I think we did a fantastic job with doing this and kept GitHub in its original form. You don’t see more Microsoft in GitHub.com than you saw four years ago and that has helped us to continue to grow and we’re very excited where this is going.”

He noted that GitHub has continued to receive the same support from Microsoft’s leadership team, including CEO Satya Nadella, over the years. “Microsoft has not forgotten why we did the deal in the first place and what the important pillars of the deal are. The first and foremost principle is to put developers first. And that is what we do every day,” Dohmke said.

I’m not a regular user of GitHub, but I use it enough that I would notice something is changing. All I can say is that GitHub has only gotten better and some very innovative features have rolled out in the last 4 years.

The support from Microsoft has certainly helped, but this goes to show, if you believe in a product, leave it and they will be fine in the long run.