Alexa was supposed to be a hit. Today, it is because of her that Amazon is in trouble
When the voice assistant first launched in November 2014, the media dubbed it “the computer of the future.” CNET even described it as something out of the Star Trek sci-fi series. Komputer Świat heralded the product as “the future of every home”.
Nearly 10 years later, the product failed to live up to Amazon’s expectations.
In the first quarter of this year, Amazon’s “Worldwide Digital” unit, which includes everything from Echo smart speakers and Alexa voice technology to Prime Video streaming service, had an operating loss in the amount of over USD 3 billion. — according to internal data obtained by Insider.
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The vast majority of Worldwide Digital’s losses were related to Alexa and other Amazon devices. There was a loss by far the largest of all Amazon business units and even greater than the losses from the still emerging physical stores and grocery business.
Personally involved in product development was Jeff Bezos, who kept checking for product improvements. Four years after its launch, Alexa became controversial. Reports of it mistakenly sending voice recordings to the wrong person or that Amazon employees secretly eavesdropping on private conversations have stoked privacy concerns for users.
Amazon is losing patience
While Amazon’s business model used to tolerate this type of poor financial performance of its hardware businesses, this is no longer the case. According to press reports and an internal email reported by Insider, the Alexa and Amazon devices team is now the main target of the largest layoffs in the company’s history.
Employees unofficially describe a department in crisis. Alexa used to be one of the company’s fastest-growing projects. Now, rising losses and massive job cuts illustrate the crisis facing not only the voice assistant, but a wider range of Amazon products.
It is also a benchmark for the failure of the company’s business model of selling devices at cost and recouping revenue from additional purchases at a later time.
Employees spoke on condition of anonymity as they are not authorized to speak to the press. “Alexa is a colossal failure of the imagination,” said one former employee. “It was a missed opportunity,” he added.
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