Big Tech companies like Google, Amazon, and Apple have been pushing hard for the implementation of smart speakers and voice assistants as the way of the future, but turns out, people aren’t using them the way the companies would like i.e. a way they can monetize. With a report from Business Insider indicating that the Amazon Alexa division has lost $3 billion USD in the first quarter of 2022, some are considering the endeavour dead.
Amazon is going through the biggest layoffs in the history of the company with a plan to eliminate 10,000 jobs with most coming from the Alexa division. The reason for this is that Alexa doesn’t make any money, pure and simple. The losses from the Alexa division are apparently double that of any other division with the report stating that the team is set to lose $10 billion this year.
Business Insider spoke to a dozen current and former employees from the division, and they described it as “in crisis”. The reason for this is that every plan to monetize Alexa has failed. One employee called Alexa “a colossal failure of imagination”. There was a crisis meeting in 2019 trying to figure out how to monetize the service but to no avail.
Alexa was a pet project for Jeff Bezos, former CEO of Amazon, but since he stepped down, the new CEO, Andy Jassy, isn’t interested in Alexa leading to the product to languish in a no-man’s land.
The Amazon Echo line is among the “best-selling items on Amazon” but most of them are sold at cost. An internal document described this business model saying, “We want to make money when people use our devices, not when they buy our devices.”
That hasn’t worked out. The hope was that Alexa would convince people to buy things from Amazon using their voice, but trust is hard to come by for consumers. How many times have you bought something without looking at it or comparing prices? Or what about those stories about voice assistants listening to your conversations? Even asking for a specific song can sometimes lead to a headache if the artist name or song name isn’t a real word or has several differing versions. So why take the risk with a purchase?
Per the report, “Alexa was getting a billion interactions a week, but most of those conversations were trivial commands to play music or ask about the weather.” Not even Amazon would try to monetize those basic tasks.
They did try to partner with companies so that a voice command could call an Uber or order a pizza, and Amazon could get a cut. However, “By 2020, the team stopped posting sales targets because of the lack of use.” Turns out it’s still easier to use your phone just in case Alexa mishears your address or something like that.
According to one employee, “There’s no clear directive for devices” in the future. Essentially, the hardware is profitable so why keep making new iterations of it? This is how we got the Astro robot, an Alexa on wheels, that nobody liked, not even internally.
Business Insider puts Alexa third in the user rankings amongst other voice assistants with Google Assistant at number one with 81.5 million users, Apple’s Siri at 77.6 million, and Alexa at 71.6 million.
Google is facing almost identical problems as Amazon because, as it turns out, not even Big Tech can monetize basic functionality (as much as they’d like to). Both companies are trying to minimise losses by cutting resources to the division.
Apple’s smart speaker failed for completely different reasons. The HomePod was WAY more expensive than their competition with an asking price of $350 USD. Nobody wanted to pay that given there were cheaper alternatives, so it was discontinued in 2021. At least Apple and Google can still utilise their voice assistants on their smartphones, but Amazon doesn’t have such an outlet.
So are voice assistants dead? Those listening devices designed to sell you things by picking up keywords in your conversations and suggesting them in web browsers? Let them die.
For more, Jeff Bezos has pledged to give most of his fortune to charity.
