Dopo Twitter, Meta e Google, mancava Amazon nel bollettino delle recenti
difficoltà in Silicon Valley
Sembra un fallimento del business model del Surveillance Capitalism, o è
troppo presto per parlarne?
<https://arstechnica.com/gadgets/2022/11/amazon-alexa-is-a-colossal-failure-on-pace-to-lose-10-billion-this-year/>
Would you pay a monthly fee for voice commands? —
Layoffs reportedly hit the Alexa team hard as the company's biggest
money loser.
echo sphere
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.
A division in crisis
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.
The report says that while Alexa's Echo line is among the "best-selling
items on Amazon, most of the devices sold at cost." One internal
document described the business model by saying, "We want to make money
when people use our devices, not when they buy our devices."
That plan never really materialized, though. It's not like Alexa plays
ad breaks after you use it, so the hope was that people would buy things
on Amazon via their voice. Not many people want to trust an AI with
spending their money or buying an item without seeing a picture or
reading reviews. The report says that by year four of the Alexa
experiment, "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 questions aren't monetizable.
Amazon also tried to partner with companies for Alexa skills, so a voice
command could buy a Domino's pizza or call an Uber, and Amazon could get
a kickback. The report says: "By 2020, the team stopped posting sales
targets because of the lack of use." The team also tried to paint Alexa
as a halo product with users who are more likely to spend at Amazon,
even if they aren't shopping by voice, but studies of that theory found
that the "financial contribution" of those users "often fell short of
expectations."
In a public note to employees, Jassy said the company still has
"conviction in pursuing" Alexa, but that's after making huge cuts to the
Alexa team. One employee told Business Insider that currently, "There's
no clear directive for devices" in the future, and that since the
hardware isn't profitable, there's no clear incentive to keep iterating
on popular products. That lack of direction led to the internally
controversial $1,000 Astro robot, which is basically an Amazon Alexa on
wheels. Business Insider's tracking now puts Alexa in third place in the
US voice-assistant wars, with the Google Assistant at 81.5 million
users, Apple's Siri at 77.6 million, and Alexa at 71.6 million.
Are all voice assistants doomed?
We have to wonder: Is time running out for Big Tech voice assistants?
Everyone seems to be struggling with them. Google expressed basically
identical problems with the Google Assistant business model last month.
There's an inability to monetize the simple voice commands most
consumers actually want to make, and all of Google's attempts to
monetize assistants with display ads and company partnerships haven't
worked. With the product sucking up server time and being a big money
loser, Google responded just like Amazon by cutting resources to the
division.
While Google and Amazon hurt each other with an at-cost pricing war,
Apple's smart speaker plans focused more on the bottom line. The
original HomePod's $350 price was a lot more expensive than the
competition, but that was probably a more sustainable business model.
Apple's model didn't land with consumers, though, and the OG HomePod was
killed in 2021. There's still a $99 "mini" version floating around, and
Apple isn't giving up on the idea of a big speaker, with a comeback
supposedly in the works. Siri can at least be a loss leader for iPhone
sales, but Apple is also hunting around for more continual revenue from ads.
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