Amazon's voice assistant Alexa hardware team will lose $10 billion this year

Amazon is currently experiencing the largest layoffs in the company's history, planning to cut about 10,000 jobs. One of the departments most affected by layoffs is Amazon's Alexa voice assistant. department, which has clearly fallen out of favor.

The Alexa voice assistant has been around for 10 years, and its functions have been copied by Google and Apple. Alexa never managed to create a consistent revenue stream, though, so Alexa didn't really make money. Along with Amazon Prime Video, the Alexa unit is part of Amazon's global digital division, which Business Insider says will lose $3 billion in the first quarter of 2022, with "the vast majority of that loss being attributed to Alexa and other divisions Twice as much, with a report that the hardware division will lose $10 billion this year.

Business Insider spoke to a dozen current and former employees of the company's hardware team," who described a department in crisis. Almost every plan to make Alexa profitable has failed, with one former employee calling Alexa a "colossal failure of imagination" and a "wasted opportunity." This month's layoffs are the culmination of years of trying to turn things around.

While the Alexa Echo line is one of the best-selling items on Amazon, most of the devices are sold at cost. An internal document described the business model: 

We want to make money when people use our devices, not when they buy our devices. That plan never actually materialized, though.

Amazon wants people to buy more on Amazon through their voice assistant, but the reality is that not many people want to spend money or buy something without seeing a picture or reading a review. Alexa receives 1 billion interactions a week, but most conversations are trivial commands to play music or ask about the weather, which are not monetizable.

In an open letter to employees, Amazon CEO Jassy said the company remains "steadfast in its pursuit" of Alexa (after making significant layoffs to the Alexa team). An employee revealed that there is currently "no clear directive" for devices, and since there is no profit in hardware, there is no clear incentive to keep rolling out popular products.

Data shows that Alexa ranks third in the voice assistant war in the United States. Google Assistant has 81.5 million users, Apple's Siri has 77.6 million, and Alexa has 71.6 million.

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