Alexa in free fall and the thousands of cuts from Amazon

Alexa has been responsible this year for approximately 10 billion costs (be careful, Americans) of dollars for Amazon this 2022 and, given the global situation of the Tech, it is being one of the main sections with cuts that provide the company with savings.

as a business, Amazon has always taken losses in many of its businesses (mainly in Alexa and the difference or margin between cost-sale of many of its speakers) with the aim of expanding. While this has worked for them so far (and quite well), it seems that these days are coming to an end and The company that Jeff Bezos founded is going to start cutting back in many sections of its business.

It is planned that Amazon cuts some 10,000 employees according to the latest information and it will do so all over the world. One of the departments that will have the most impact will be the one in charge of producing the Amazon Echo product line (speakers with Alexa integrated) and Prime Video. According to Business Insider, Alexa is in the spotlight.

And it is that, the unit of the digital assistant and the production of its hardware accumulate some losses of up to 3 trillion only in the first fiscal quarter of 2022 according to internal data. Most of it directly related to Alexa. The losses are the largest of the entire company, doubling those of its physical stores and the “supermarket” business.

Part of the problem stems from the fact that, under the control of Jeff Bezos, Amazon expected the Echo and Alexa devices to recoup their cost and generate revenue encouraging customers to verbally place more orders (has anyone ever placed any? – Alexa, ask for an iPhone charger. Really? Which one? How do I choose and see prices/deals? Compatibilities? Nonsense for most products).

Under expectations that it was initially loss-making, as well as that the original Echo would sell more than 5 million units in its first two years, the team over-hired in 2016 to exceed 10,000 employees. Being a Bezos pet project, the team also received more protection from internal changes that affected others.

But Alexa seems to have a cap

As time has passed, Amazon has discovered that Alexa was used (and a lot), but for actions with little added value and even less for the company. In other words, what we ask Alexa does not serve Amazon to generate money or to excessively improve the product. “Alexa, play music” or “Alexa, let me know in 10 minutes” are some of the most common uses and this does not serve Amazon much.

In 2019, hiring for this area was frozen, only vacancies that arose as the team decided to change jobs were filled. Everything is a ball: there is no motivation to grow professionally, the product does not have many development possibilities, you cannot hire to try to improve it or give it another twist and people end up leaving. The day to day of companies.

That same year, Amazon focused its efforts on understanding the financial performance of its virtual assistant. Hiring a specific team to track the behavior of users who buy through Alexa (they would have little work) and Prime subscriptions. Sure enough, the results were disastrous for Amazon.

In 2020, Bezos himself began to lose enthusiasm for Alexa, giving him less participation in Marketing campaigns. It was the beginning of the decline of Amazon’s virtual assistant.

According to the latest information, the company would be studying which strategy to choose in the long term for Alexa. Wireless headsets that include the assistant itself or even an Augmented Reality product would have been planned, but they are very unlikely to come to light if the cuts continue at Amazon.

With Amazon laying off Alexa-savvy engineers and with a focus on its “Astro” home robot, This could be a great opportunity for Apple to recruit talent and improve Siri once and for all. being able to leave an environment where only Google can be the competition of Siri and with a lot of potential ahead. Will the fall of Alexa be a new life for Siri?