Amazon’s voice assistant technology, Alexa, is draining billions from the company.
Alexa was first released in November of 2014, almost 10 years ago. Since then, the Alexa brand has expanded to include not just the signature spherical model, but also auto devices and tabletop versions that include a screen rather than just audio capabilities. However, despite its extreme popularity, Alexa is actually causing Amazon 10 billion in profit loss for 2022.
Amazon's reasoning for their lack of motivation for advancements is that it’s not a continuously profitable device. Alexa’s prime capabilities are providing hands-free commands for weather reports, music, and shopping lists. While this comes in handy for the average user, none of these things continue to make them money after the one-time purchase, unlike other Amazon extensions such as Prime subscriptions.
From the beginning of its existence, Amazon has boasted about the ability to order things completely through using Alexa. This was their plan to make them continuous money. However, most consumers feel uncomfortable having an AI control their money and purchases. Because of this, the feature didn’t provide the financial result Amazon was banking on.
While Alexa isn't going away entirely, Amazon is laying off several employees and downsizing the department. If Amazon can find a new way to monetize the product for current owners, there may still be hope for Alexa in the future.
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