As useful as it can be in everyday life: Alexa has not yet brought any profit for Amazon.
Amazon is currently going through one of the biggest waves of layoffs in its company history and one of the reasons for this is probably the immense losses caused by the smart home devices around the language assistant Alexa.
Around 10,000 layoffs are planned, with the Alexa division being particularly hard hit. She is part of Worldwide Digital
The group lost $3 billion in the first quarter of 2022 alone and is on track to report a loss of $10 billion by the end of the year. The main culprit is said to be the language assistant.
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Why doesn’t Alexa make a profit?
According to employees by Business Insider have been surveyed, Amazon Alexa has always been a losing proposition – on purpose. The plan was to sell the Amazon Echo devices at a profit and recoup the lost money through Alexa.
You can see that again and again and also currently on the Black Friday offers, where you can buy the Echo devices very cheaply. If you decide to buy it, we have simple instructions for you on how to set up Alexa:
Setting up Alexa: First steps with Amazon Echo Dot and Co.
While Echo devices are indeed very popular, and up to a billion voice commands are given each week, they appear to generate very little profit for Amazon.
Hardly anyone uses Alexa to make purchases by voice. Most voice commands are limited to simple things like weather information or music playback, which are difficult or impossible to monetize. Understandable, who wants to shop online without first being able to see a picture, the price or test reports?
Even pizza and taxis cannot save Alexa
Unsurprisingly, such voice commands are used much more frequently than “Order product XYZ”.
In order to increase profits, Amazon also entered into partnerships with some companies such as Dominos or Uber. So it’s possible to order a pizza or call an Uber cab through Alexa and Amazon would get a cut. However, this plan probably didn’t work out either, since Amazon hasn’t been pursuing a specific sales target for it since 2020 due to insufficient use.
All the plans to make Alexa big were hatched under former CEO Jeff Bezos. In 2019, a crisis meeting was held at the company with the aim of turning around the loss-making business – without much success. By the end of the year, Amazon stopped hiring for Alexa and even Jeff Bezos began to lose interest.
The new CEO Andy Jassy is now turning the tables and finally wants to minimize the losses. In a public message he assures all employees that Alexa will continue to be the focus, but only after the division has been significantly reduced. Employees are themselves unsure of Alexa’s future at Amazon as the hardware isn’t profitable.
more on the subject
Connect Alexa to Spotify: Instructions and popular commands
Do you use voice assistants yourself and have you ever made a purchase with them via a voice command? If you care about voice commands, would you be willing to pay a higher price for the hardware so companies can keep offering them? Tell us what you think about it in the comments!
