It’s a sad reality: Amazon still hasn’t figured out how to make money when a user asks Alexa for the weather.
Amazon’s financial situation has not been good in recent months. Since the beginning of the year, the share price has fallen by more than 47%. To try to correct the situation, the leaders of the firm will lay off around 10,000 employees. But according to information from Business Insideremployees may not be the only adjustment variable: the company would also reduce the budget for its voice assistant Amazon Alexa and related products.
Three billion losses in the first quarter of 2022, ten over the year
The first version of Alexa dates from November 2014, also the year and month of the launch of the Echo connected speaker. Despite the years, this entity, integrated within the Worldwide Digital division, which also includes Amazon Prime Video, would be far from profitable: the division would show a deficit of 3 billion dollars in the first quarter of 2022 alone, around ten billion over the year. The overwhelming majority of its losses are believed to be attributable to Amazon Alexa.
The journalists of Business Insider were able to interview a dozen employees, some of whom are still working, involved in this project. According to them, the crisis would be deep. One judges Alexa as a ” wasted opportunity and blames the lack of imagination around its ecosystem. He points out that since the end of 2019, the division has frozen all hiring, and that Jeff Bezos has openly lost interest in the project since this period. His successor, Andy Jassy, would not have much interest in it either.
Alexa’s main problem would be the difficulty in monetizing the service. If the Echo speakers are among the best-selling items on Amazon, they would be offered at cost, according to an internal document. A note would also detail the economic model in these terms: We want to make money when people use our devices, not when they buy them “. A model somewhat inspired by that of the games have a servicein short.
Very basic interactions most of the time
For the moment, Amazon has not found the miracle recipe for generating money when using its assistant. Initially, the general idea was to entice people to make purchases on the site. Unfortunately for Amazon, pushing a player to acquire a costume or skin seems much easier than directing an Alexa user to the site to shop.
The company then integrated the skills and considered direct partnerships with third-party companies. But in fact, the overwhelming majority of interactions are limited to trivial exchanges relating to the weather of the day or the launch of a song; nothing to earn precious dollars.
Acted in September, the integration of advertisements to the most common answers may bring a little reprieve to Amazon’s voice assistant, but certainly not its salvation. Andy Jassy has not firmly shown his wish to put an end to it, but does not plan to restart the machine with billions either.
The future will tell us where this in-between leads Alexa, obviously less popular than its competitors. Indeed, the Amazon assistant would have 71.6 million users, against 77.6 million for Siri (Apple) and 81.5 million for the Google Assistant, again according to data from Business Insider.
Source : Business Insider
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