Amazon Alexa Labelled ‘Colossal Failure’ – Report Alleges

Amazon’s 10,000 job cuts reportedly impacts Alexa unit the hardest, while device hardware group is described as ‘division in crisis’

Amazon is currently undergoing one of its largest job layoffs in its corporate history, and the impact of these cuts could be felt in millions of British homes.

Last week Amazon CEO Andy Jassy confirmed the job losses will continue into 2023, after Amazon began axing staff at its hardware devices and services team.

Now Business Insider (BI) has reported that one of the Amazon areas hit the hardest is the Amazon Alexa voice assistant unit, which is apparently falling out of favour at the e-commerce giant.

An Alexa-powered device is seen in an Amazon TV ad. Credit: Amazon

Alexa downfall?

Indeed, Business Insider details “the swift downfall of the voice assistant and Amazon’s larger hardware division.”

Amazon’s Alexa of course has a presence in million of UK homes thanks to its integration into Amazon’s Echo devices for the past decade. Alexa, for millions of users, has been the one of the leading voice assistants they interact with.

Amazon's Echo Spot smart speaker. Amazon
Amazon’s Echo Spot smart speaker. Image credit: Amazon

Despite this, it seems that Alexa never managed to create an ongoing revenue stream for Amazon, and it doesn’t really make any money.

According to Business Insider, the Alexa division is part of Amazon’s “Worldwide Digital” group along with Amazon Prime video. This group lost $3 billion in just the first quarter of 2022, with “the vast majority” of the losses blamed on Alexa.

To put that into context, that is apparently double the losses of any other division, and the Business Insider report says Amazon’s hardware team is on pace to lose $10 billion this year.

The BI report spoke with “a dozen current and former employees on the company’s hardware team,” who described “a division in crisis.”

It states that just about every plan to monetise Alexa has failed, with one former employee calling Alexa “a colossal failure of imagination,” and “a wasted opportunity.”

It seems that users are interacting with Alexa in ways that Amazon just cannot monetize, such as asking Alexa about the weather, play music, or setting a timer.

What people are not doing is fulfilling Amazon’s hope that customers would buy things on Amazon using their voice.

The BI report suggests that the Amazon layoffs are the end result of years of trying to turn things around.

This is despite Alexa’s Echo line being among the “best-selling items on Amazon, most of the devices sold at cost.”

One internal document reportedly described the business model by saying, “We want to make money when people use our devices, not when they buy our devices.”

Amazon response

In a public note to employees, Jassy said the company still has “conviction in pursuing” Alexa, but that comes after making huge cuts to the Alexa team.

Silicon UK approached Amazon for a comment about the Business Insider article.

“We are as committed as ever to Echo and Alexa, and will continue to invest heavily in them,” Dave Limp, senior VP of devices & services at Amazon told Silicon UK in an emailed statement.

Business Insider however now ranks Alexa in third place in the US voice-assistant wars, with the Google Assistant at 81.5 million users, Apple’s Siri at 77.6 million, and Alexa at 71.6 million.

The good news is that Alexa will not stop working anytime soon, but some observers are worried that Alexa improvements may be slower and less noticeable than before.