Amazon has decided to make drastic cuts in its non-essential projects. Alexa, the company’s intelligent personal assistant, is apparently one of them.
Like the other GAFAM members, 2022 was a dark year for Amazon. The e-commerce juggernaut has even snagged the sad record of the company having suffered the biggest drop in listing in the history of the American stock market. In just over a year, Amazon has lost $1 trillion in value. A vertiginous drop of more than 53%. Under these conditions, company officials have decided to curb investments in non-essential projects. The intelligent personal assistant Alexa is one of them.
It is The Wall Street Journal which reveals the information: the CEO of Amazon is personally evaluating the follow-up to be given to the Alexa program. The e-commerce giant has been conducting an internal audit for several months which aims to make clean cuts in all unprofitable subsidiaries. The American newspaper claims that with its 10,000 employees, Amazon’s Alexa division is running at a loss. It generates an annual deficit of $5 billion in operating costs. The Amazon Echo and other connected objects of the brand are loss leaders. They don’t bring in much and may even cause the company to lose money.
Alexa is losing money to Amazon, its development will be put on hold
Alexa research and development teams could therefore be greatly reduced. This will slow down the evolution of the intelligent assistant so emblematic of the company. The question for financiers arises in these terms: should we continue to add features such as responses sponsored by advertising, to a voice assistant that is not as successful as those of the competition? Alexa technologies are very advanced, but statistics collected by Amazon show that users are very far from exploiting them to their full potential.
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Other Silicon Valley giants share the same setbacks as Amazon. Meta, in the first place, had to dismiss no less than 10,000 employees, as Twitter parted ways with half of its workforce. However, these measures are not enough to stop a downward spiral. Only Apple is doing well. The market value of the Apple brand is almost equivalent to that of Facebook, Amazon, Google and Microsoft combined.