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You’ve probably seen ads for it, or own one yourself: the Amazon Alexa voice assistant. I personally love the device—but my affection is not enough to stop Amazon from losing $10 billion a year, laying off 10,000 workers, and gutting its Alexa unit.
— AppleInsider (@appleinsider) November 22, 2022
Amazon’s Alexa and the devices team at large is now the prime target of the biggest layoffs in the company’s history, according to press reports and an internal email seen by Insider.
What’s the problem? A former employee sums it up: “Alexa is a colossal failure of imagination. It was a wasted opportunity.”
Full disclosure: I’m a huge fan. When we remodeled our house last year, I was faced with the complications of wiring my home so that my large, old-school stereo receiver could fire up speakers throughout the property, inside and out. Call me bourgeois, but my dream had always been to have a central source of tunes that would play on the porch, in the dining room, in the kitchen—all at the same time.
I could crawl up in the attic, drill some holes in the ceiling, run some wires, purchase some surprisingly expensive in-ceiling speakers and get the job done. And yet somehow I found the project too daunting and complicated and kept putting it off for years.
Enter Alexa. These relatively inexpensive speakers with frankly wowza sound came to the market, and suddenly I was able to achieve whole-house melodies for a few hundred bucks instead of the thousands I would have had to invest in similar solutions like Sonos. Yes, there was a catch: you had to pay $14.99 a month for Amazon Music Unlimited to enable syncing of the speakers. To me, it’s been worth it.
i don't care how much money amazon is losing on alexa. if it allows me to play french accordion music on demand, that's the supreme definition of a loss-leader right there folks.
— BPLewis’ Life Is One Big Parody Account (@BPLewis) November 22, 2022
Lest you think I’m an Alexa salesman, I will point out the issues: oftentimes it cuts out. It’s impossible to tell if the fault lies with Alexa or my internet, but let’s just put it this way: the more zones I try to play music in, the more it just simply goes kaput. And then there’s always the question of privacy—is she listening in on your conversations? Short answer? Yes. Some find this a dealbreaker, others don’t particularly care.
The main problem for Amazon, however, is that my love of Alexa devices does not translate into profits for the eCommerce behemoth. They sell the devices at cost, you see, and expect me to use it to buy all sorts of stuff from their massive retail division:
When Alexa first launched it pioneered a new business model for the company. The goal wasn’t to sell more units like a traditional hardware company. Instead, Amazon wanted shoppers to buy more things through Echo devices by placing orders through the voice-assistant. As one internal document put it: “We want to make money when people use our devices, not when they buy our devices.”
If more people like TV host Andy Cohen shopped via AI in this frankly annoying commercial, saying, “Alexa, order me some chocolate chip cookies,” Amazon would be a lot happier:
— Alexa (@alexa99) November 22, 2022
The obvious question is: what kind of chocolate chip cookies? How many? And are you going to do your whole grocery order like that? Wouldn’t it be easier to just sit down at your computer or pull out your phone? (You might even think about going to the grocery store…. Just sayin’.)
Yes, it’s incredibly useful for music—my favorite feature is “play songs like” where you can ask for a particular musician or band and be rewarded with an entire playlist of similar tunes—but that’s not what they were hoping for. Somehow they thought I’d be saying, “Alexa, buy a crate of widgets!”
…[by 2018] Alexa was getting a billion interactions per week, but most of those conversations were trivial, commands to play music or ask about the weather. That meant less opportunities to monetize. Amazon can’t make money from Alexa telling you the weather — and playing music through the Echo only gives Amazon a small piece of the proceeds.
Few people are actually shopping through the contraption. Consumers would much rather look at a product on a website—or God forbid, at an actual store—compare it to others, and make an informed decision, Despite owning several Alexa-enabled devices, I’ve never ordered a single item from any of them, and I have no plans to change that.
A pun is fun but it won’t make you any money:
Anything is paw-sible 🐾 when you ask me for a pun! pic.twitter.com/cZz1GXCI31
— Alexa (@alexa99) November 8, 2022
Amazon also tried to lure people into spending by striking deals with Uber, Lyft, and Domino’s with the thought that folks would order rides or pizzas using Alexa. It never really caught on, and similar attempts at monetizing the devices faced a similar fate.
Then along came the competition, with Google and Apple offering their versions which eventually overtook Alexa’s market share. In the U.S., Google Assistant currently sports 81.5 million users, trailed by Apple Siri’s at 77.6 million, with Alexa in last place with 71.6 million users.
Like fellow CEO Mark Zuckerberg of Meta, who’s lost billions on his pet metaverse project, “Horizon Worlds,” Bezos’ artificial intelligence dreamchild has fallen on hard times. I wrote in September that Amazon and Bezos seemingly own everything, and that’s a problem. In this case, however, I’m not snickering at Alexa’s setbacks, because I think the devices are amazingly cool.
I’m just not going to shop on them.
As a final holiday gift, I give you this classic Saturday Night Live skit making fun of seniors trying to use the patient AI assistant: