The colossal failure that is Amazon Alexa is expected to lose $10 billion this year.

By Justin Jones Last updated Nov 22, 2022

The colossal failure that is Amazon Alexa is expected to lose $10 billion this year. Currently, Amazon is undergoing its largest round of layoffs ever, with a goal of eliminating 10,000 positions. The Amazon Alexa voice assistant device, which is reportedly losing favor inside the e-commerce behemoth, is one of the areas that has been impacted the hardest. According to a Business Insider article that describes “the swift demise of the voice assistant and Amazon’s larger hardware division,” this is the case.

Since it has been around for ten years, Alexa has been a trailblazing voice assistant that both Google and Apple have heavily imitated. However, Alexa has never been able to establish a consistent source of income, so she doesn’t actually generate any.

Business Insider reports that the “Worldwide Digital” department, which includes the Alexa division and Amazon Prime Video, lost $3 billion in just the first quarter of 2022, with “the great majority” of the losses attributable to Alexa. According to the article, the hardware division is expected to lose $10 billion this year, which is reportedly twice as much as any other division has lost. It seems like Amazon is sick of wasting all that money.

A division in crisis

A division in crisis was described by “a dozen current and former personnel on the company’s hardware team,” according to the BI story. Almost every attempt to monetize Alexa has been unsuccessful, and one former employee has referred to Alexa as “a wasted opportunity” and “a tremendous lack of imagination.” The end effect of years of attempting to turn things around is the layoffs this month.

When Alexa was allegedly the “pet project” of previous CEO Jeff Bezos, the firm gave her a significant amount of time to develop. In an effort to solve the monetization issue, an all-hands crisis meeting was held in 2019, but it was unsuccessful. Alexa’s recruiting was frozen by the end of 2019 and Bezos began to lose interest in the project around 2020. No doubt,

According to the research, even if Alexa’s Echo line is one of “Amazon’s best-selling items, most of the gadgets sold at cost.” We want to make money when people use our gadgets, not when they buy them, read the business concept in one internal memo.

However, that strategy never really took off. It’s not like Alexa plays commercial breaks after you use it, so the idea was for users to utilize their voice to make voice-activated purchases on Amazon. Few people are willing to trust an AI with their financial decisions or with purchasing something without first viewing a picture or reading reviews. By year four of the Alexa experiment, the report states that “Alexa was getting a billion interactions a week, but most of those conversations were quiet.”.

Jassy said in a memo to staff that the company still had “belief in pursuing” Alexa despite making significant layoffs to the Alexa team. One employee told Business Insider that since the hardware isn’t profitable, there is now “no clear mandate for devices” and that there isn’t a compelling reason to keep improving on successful goods.

The internally divisive $1,000 Astro robot, which is essentially an Amazon Alexa on wheels, is the result of this lack of direction. According to Business Insider’s tracking, Google Assistant currently has 81.5 million users in the US, followed by Apple’s Siri with 77.6 million users and Alexa with 71.6 million.

Are all voice assistants doomed?

Is the future of voice assistants from Big Tech numbered? Everyone appears to be having difficulty with these. Last month, Google stated essentially the same issues with the Google Assistant business model. All of Google’s attempts to monetize assistants with display ads and business partnerships have failed, and the straightforward voice commands that the majority of users truly want to make cannot be made profitable. Similar to Amazon, Google responded by reducing resources for the division as a result of the product consuming a lot of server time and being a significant financial loser.

Apple’s ambitions for smart speakers were more concerned with the bottom line than Google and Amazon’s at-cost pricing war, which affected both companies. Although the $350 pricing of the original HomePod was significantly higher than that of the competition, that was undoubtedly a more viable business strategy. However, the Apple model didn’t catch on with customers, and the first HomePod was discontinued in 2021. Apple isn’t giving up on the idea of a large speaker; a comeback is reportedly in the works. There is still a $99 “mini” version circulating. At the very least, Siri can serve as a loss leader for iPhone sales, but Apple is also looking for ways to increase its ongoing ad revenue.