Apple's Siri may disappoint, but Amazon's Alexa is a 'colossal failure'

Just about every plan to monetize Alexa has failed.

From Ron Amadeo's "Amazon Alexa is a 'colossal failure,' on pace to lose $10 billion this year" posted Monday on Ars Technica:

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.

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.

My take: Has Apple ever made the mistake of selling hardware at cost?

24 Comments

  1. Greg Lippert said:
    Alexa should charge for 10¢ for every answer – ha!

    3
    November 22, 2022
  2. Brian Loftus said:
    Raising the price of the Echo hardware was not on the list of how to make money?

    3
    November 22, 2022
    • Fred Stein said:
      Great question. If Amazon feels that users won’t pay for value, that implies that they don’t believe the product has much value.

      Next question is why did they wait so long?

      2
      November 22, 2022
    • Neal Guttenberg said:
      Brian,

      Raising the price wasn’t an option because with Alexa, you are the product.

      4
      November 22, 2022
  3. Romeo A Esparrago Jr said:
    This is what happens when you win the race to the bottom.

    5
    November 22, 2022
    • Gregg Thurman said:
      Upvoted you Romeo.

      The highest price for Alexa at both Target and Amazon itself is &49.99.

      Apple.s HomePod mini sells for $99.99.

      Need I say more?

      1
      November 22, 2022
      • Romeo A Esparrago Jr said:
        Thanks, Gregg.
        An opportunity for  to take advantage of.
        Not to lower prices.
        But for  double down on making Siri the best voice assistant out there.

        1
        November 23, 2022
  4. Neal Guttenberg said:
    Part of the problem with Alexa is that it really wasn’t designed as a voice digital assistant. It was designed as an overly eager shopping aid that gets you to order things from Amazon that could also be used as a voice digital assistant. My recollection was that people liked it initially but then there was some type of creepiness feeling to it. I am not looking for excuses for SIRI’s lack of progress over the years but maybe Apple is erring on the side of being less creepy. Just a thought.

    edited-added the word “not” prior to looking for excuses

    2
    November 22, 2022
  5. Steven Philips said:
    It was a gimmick from the start. How many things can you think of to ask – more than once? Hey Alexa! What time is it? (It’s Howdy Doody Time!) when you’ve got a watch on your wrist! Yeah, some things might be handy when you’re cooking and have goop on your hands. How many times does that happen? And as the article notes, how do you monetize it? But… tell all your friends ALL. the amazing things Alexa can do! Unlike the limited Siri! Hey Alexa! “What time is it for Amazon?” Alexa: “It’s doody time!”

    0
    November 22, 2022
  6. John Konopka said:
    How can they spend $10B on Alexa? That’s like more than 10,000 engineers including overhead! Seems like a lot. Maybe it includes server costs?

    1
    November 22, 2022
    • John Konopka said:
      Correction, losing $10B. That is not the total spent per year on Alexa. Amazing.

      1
      November 22, 2022
    • S Lawton said:
      “That’s like more than 10,000 engineers including overhead! ” Yup

      1
      November 22, 2022
  7. John Konopka said:
    From the article:
    “ 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.”

    I wonder how they figure this. With about a billion or two active Apple devices it seems like there should be many more Siri users.

    0
    November 22, 2022
    • David Emery said:
      Well, I have never used Siri, and my wife has it enabled only to get CarPlay to work.

      (And yes, I do have a HomePod Mini, with Siri DISabled, that I use solely as a AirPlay speaker.)

      0
      November 23, 2022
  8. Kirk DeBernardi said:
    I’ve always held that the Trojan Horse effect of injecting music into people’s homes with a so-called smart speaker was the real sleeper “hook” concept behind any home speaker. NOT so much the smarts.

    Getting the answer to the capitol of North Dakota leaves no soul soothed.

    Long live the OG HomePod.

    0
    November 22, 2022
  9. Jerry Doyle said:
    From my perspective, “voice” in computing is tantamount to autonomous vehicles in the real world today. Ain’t gonna happen in my lifetime.

    1
    November 23, 2022
    • David Emery said:
      I’d rather have a self-driving car than a talking computer 🙂

      0
      November 23, 2022
      • S Lawton said:
        Then you’d rather own a Tesla than an iPhone?

        0
        November 23, 2022
        • David Emery said:
          My friend who owns a Tesla (and is very tech savvy) says, “Despite what Musk says, Tesla self-driving is years from meeting his claims, let alone be truly autonomous.” And I only talk to/listen to -people- on my phone. Otherwise, I read stuff. (I don’t do podcasts on any device, and rarely watch videos. I’m too ADD to put up with the low bandwidth.)

          0
          November 23, 2022
          • S Lawton said:
            “And I only talk to/listen to -people- on my phone. ” Doesn’t matter. With Sick capability, it is a talking computer.

            0
            November 23, 2022
              • S Lawton said:
                “I’d rather have a self-driving car than a talking computer ” You have a talking computer. Doesn’t matter if you use it or not.

                0
                November 23, 2022

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