Alexa – Amazon’s ‘fatal’ mistake: Never wanted to sell many devices, is a ‘black hole’ swallowing the company’s money

Tram Ho

When Amazon’s Alexa voice assistant first launched in November 2014, many newspapers called it the “computer of the future” or “the future of every home”.

Nearly 10 years on, Alexa doesn’t seem to live up to the US e-commerce giant’s expectations.

Alexa - Sai lầm ‘chí mạng’ của Amazon: Chưa từng muốn bán được nhiều thiết bị, là ‘hố đen’ nuốt chửng tiền của công ty - Ảnh 1.

In the first quarter of 2022, Amazon’s “Global Digital” division, which includes everything from Echo smart speakers and Alexa voice technology to streaming service Prime Video, lost more than $3 billion.

The majority of Worldwide Digital’s losses are related to Alexa and other devices, according to an insider. By far, this is the largest number of all Amazon businesses, even double the loss from the physical stores and the still fledgling grocery business.

According to Business Insider, Alexa is now the main target of the largest layoffs in the company’s history due to underperformance. Many current and former employees in Amazon’s hardware division say Alexa is in crisis.

In the past, Alexa used to be one of the company’s fastest growing projects, but the growing losses and the plan to reduce the number of employees showed the rapid decline of Alexa in particular and the division. Amazon hardware in general.

Amazon has not yet responded to a request for comment on Alexa’s situation.

Alexa - Sai lầm ‘chí mạng’ của Amazon: Chưa từng muốn bán được nhiều thiết bị, là ‘hố đen’ nuốt chửng tiền của công ty - Ảnh 2.

Alexa and Echo used to be Jeff Bezos’ “pet” project.

When Alexa launched, it pioneered the company’s new business model. The goal is not to sell more products. Instead, Amazon wants users to shop more through the Echo smart speaker by ordering through the virtual assistant Alexa. An internal Amazon document reads: ” We make money from people using our devices to buy other products, not from buying that device .”

The first-generation Echo speakers surprised everyone by selling more than 5 million units in the first 2 years. Amazon does not disclose sales figures for Alexa or related devices.

By 2016, this device was even featured in an advertisement shown at the hit Super Bowl event. Two years later, Alexa’s team has nearly doubled in size to more than 10,000 employees.

The product is also the brainchild of Jeff Bezos, making the Alexa development team one of the most popular at Amazon. Bezos even personally reviewed the product’s email marketing campaigns. The billionaire pushed the team to reduce Alexa’s response time to far below the norm.

Alexa - Sai lầm ‘chí mạng’ của Amazon: Chưa từng muốn bán được nhiều thiết bị, là ‘hố đen’ nuốt chửng tiền của công ty - Ảnh 3.

Four years after its launch, Alexa has repeatedly caused controversy about sending voice recordings to the wrong people or Amazon employees eavesdropping on users’ private conversations. This raises privacy concerns.

And the first cracks in the product business model began to appear. Internally, the Alexa development team worries about user interaction.

At the time, Alexa was getting 1 billion interactions a week, but most of those conversations were casual, just ordering music or asking about the weather. That means fewer opportunities for Amazon to make money because they can’t collect money from Alexa telling you about the weather.

By 2018, the division was already a “black hole” swallowing Amazon’s money. The New York Times said it lost about $5 billion. This year, an employee, who asked not to be named, said the company is on track to lose about $10 billion on development of Alexa and other devices.

Alexa - Sai lầm ‘chí mạng’ của Amazon: Chưa từng muốn bán được nhiều thiết bị, là ‘hố đen’ nuốt chửng tiền của công ty - Ảnh 4.

Photo: Internet.

At a 2019 meeting, David Limp, Amazon’s senior vice president of devices and services, acknowledged concerns about Alexa’s business. According to him, for Alexa to get to the “next level”, the department needs to improve both user engagement and security.

However, employees say Alexa is continuing to struggle financially. Although the product ranks among the best sellers on Amazon, most devices are sold at original prices.

Three former employees said that at the end of 2019, the company froze hiring for this department. The morale of employees in the group also began to decline when the once very potential project was losing momentum.

The department manager even hired a team of experts to track Alexa and Echo users’ behavior on Amazon and their trends in spending on or signing up for Prime membership. But even so, Alexa’s financial contribution often falls short of expectations.

Alexa - Sai lầm ‘chí mạng’ của Amazon: Chưa từng muốn bán được nhiều thiết bị, là ‘hố đen’ nuốt chửng tiền của công ty - Ảnh 5.

In 2020, Bezos’ interest in Alexa began to dwindle. He has stopped commenting on marketing campaigns, and the team has also quietly stopped sending executive updates. After that, the group’s other campaigns were also unsuccessful and forced to stop after a short time.

Alexa couldn’t compete either after rivals Google and Apple ramped up the technology. In the US, Google Assistant currently leads with 81.5 million users, followed by Apple Siri’s 77.6 million. Alexa is currently third, with 71.6 million users.

Many Amazon employees say it’s unclear what the future of Alexa will look like. Some blame Amazon for not being interested in selling more devices, but only focusing on driving users to shop. One person said: “ There is no clear direction for Alexa development. We don’t understand what we are trying to do? Become the best product? Cheapest? When that’s not clear, things get very chaotic .”

Employees say a combination of poor morale, unsuccessful monetization efforts, and a lack of engagement between users and developers makes them feel the department has come to a standstill over the past few years.

The company’s management also remained silent after rumors that Alexa would be the main target of layoffs. It wasn’t until last Wednesday that Limp emailed the entire department to confirm.

Limp wrote: “ It is with great sadness that I have to announce this news as I know I will be losing some of the most talented employees of the digital division. I’m incredibly proud of the team we’ve built and seeing even one team member leave is never the outcome any of us wanted .”

Source: BI

Share the news now

Source : Genk