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Amazon loses money on Echo smart speakers . It ’s been an open arcanum for the duration of Alexa ’s existence . It ’s the product of the kind of loss leader strategy only a company of Amazon ’s size can get away with for a decade .
Selling hardware at a deprivation can be an effective strategy , of track . Think about printers and razor , which get collective ft into the door and make up for the loss with ink magazine and blades , respectively .
From the position of impregnation , Amazon ’s strategy can be viewed as a success . betimes this year , founderJeff Bezos claimedthat Alexa is now in 100 million homes , across 400 million devices .
fiscal realism paint a wholly unlike motion picture , however . concord to a late report from The Wall Street Journal , Amazon ’s twist divisionlost a stupefying $ 25 billion in the five - year periodbetween 2017 and 2021 . The Alexa divisionreportedly lost$10 billion in 2022 alone .
At a sealed point , a loss loss leader simply becomes a loss . That reality came crash down at the end of 2023 , whenseveral hundredwere lay off from the Alexa social unit . Eleven - fingerbreadth annual losses , twin with a scratchy macroeconomic outlook , is an untenable office , even for a company with $ 600 billion+ in yearly revenue .
Alexa is n’t the only smart helper that has come down back down to Earth in late years . Beyond offer like Bixby and Cortana , which went by entirely , consumer excitement around Google Assistant and Siri has also waned .
In recent months , however , both Google and Apple have made it clean that they ’re not ready to give up the specter . Siri took center stageat WWDC in June , as Apple breathe new life into the brand , good manners of its newApple Intelligence opening . Google likewise substantiate this week that Assistant is getting aGemini - power boostin the home .
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A 2021 written report from Bloomberg noted that , despite Alexa ’s popularity , a bulk of enquiry involve one of three task : playing music , controlling light and adjust timekeeper .
A former Amazon aged employee put it even more starkly , speaking to WSJ : “ We concern we ’ve hired 10,000 people and we ’ve built a bright timer . ” With all the published criticism leveled at Alexa in its decade - foresighted existence , that may well be the most effortlessly cutting .
While the company has continued releasing Echo gadget , admit an kick upstairs Spotannounced last calendar month , the company has taken its foot off the gas . No dubiousness there has been much soul searching among theSpheres . Much like Google and Apple , Amazon sees productive AI as the lifeline Alexa needs .
The 10,000 - somebody timer job is a resultant of devices failing to live up to client expectations . Entreatingthird - party developers to make skillshas been part of a orotund push to make Alexa more utilitarian . Amazon has also attempted to improve the supporter ’s conversational acquirement over the year .
In that respect , productive AI is a biz changer . Platforms like ChatGPT have demonstrated incredible natural language conversational aptitude . of late last year , Amazon offer apreviewof Alexa ’s productive Army Intelligence - power futurity .
“ We ’ve always mean of Alexa as an evolving service , and we ’ve been unceasingly improving it since the Clarence Day we introduced it in 2014 , ” the companionship pen . “ A longstanding commission has been to make a conversation with Alexa as natural as talking to another human , and with the rapid growth of generative AI , what we imagined is now well within scope . ”
November marks a decennium since Alexa and Echo were declare . One could n’t ask for better timing to reveal a mental picture of what the next 10 year might look like . Whether the help gets another decennium will reckon , in part , on how the next few months act out .
