Amazon Alexa is a “colossal failure” and is projected to lose $10 billion this year

Currently, Amazon is undergoing its most significant round of layoffs ever, to eliminate 10,000 positions. The Amazon Alexa voice assistant device is reportedly losing favor inside the e-commerce behemoth. It is one of the places that has been impacted the hardest. A news panel claimed “the fast demise of the voice assistant and Amazon’s broader hardware division” is the case.

Since it has been around for almost ten years, Alexa has been a innovative voice assistant that both Apple and Google have heavily imitated. Although, Alexa has yet to establish a consistent source of income. Therefore it doesn’t actually generate any.

Reportedly, the “Worldwide Digital” department includes the Alexa division and Amazon Prime video. It has 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. The loss is reportedly twice as much as any other division has lost. Amazon is sick of wasting all that money.

A division in crisis was described by “a dozen current and former employees on the company’s hardware team.” Almost every attempt to monetize Alexa has been unsuccessful. Additionally, one former employee has referred to Alexa as “a colossal failure of imagination.”


Alexa was Jeff Bezos’s “pet project”

This month’s terminations are the outcome of years of trying to improve conditions. First, when Alexa was allegedly the “pet project” of previous CEO Jeff Bezos, the firm gave a significant amount of time to develop. Then, to solve the monetization issue, an all-hands crisis meeting was held in 2019, but it was unsuccessful. As a result, Alexa’s recruiting was frozen by the end of 2019, and Bezos began to lose interest in the project around 2020. But, of course, Andy Jassy, Amazon’s brand-new CEO, doesn’t seem to care as much about keeping Alexa safe.

According to the research, even though Alexa’s Echo line is one of the “best-selling items on Amazon, most of the devices sold at cost.” In an internal paper, the business plan was stated as follows, “We want to make money when people use our devices, not when they buy our devices.”

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. Unfortunately, only some individuals are willing to trust an AI with their financial decisions or purchase something without viewing a picture or reading reviews.

By year four of the trial, according to an article, “Alexa was getting a billion interactions a week, but most of those conversations were trivial commands to play music or ask about the weather.” Those queries cannot be made profitable.

Amazon also tried to work with businesses to develop Alexa skills. So voice commands could, for example, order pizza from Domino’s or call an Uber. In return, Amazon would receive a commission. But, according to the study, “by 2020, the team stopped posting sales targets because of the lack of use.”

Is the future gloomy for voice assistants?

Is the future of voice assistants from Big Tech counted? Everyone appears to need help 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 most users genuinely want to make cannot be profitable. 

Apple’s plans for intelligent speakers were more concerned with the bottom line than Google and Amazon’s at-cost pricing war, which affected both the companies. However, the Apple model didn’t catch on with the buyers, and the first HomePod was discontinued in 2021.