Amazon is having a tough year. A cynic might say Jeff Bezos saw the writing on the wall and got out at the right time. The company incorrectly forecast pandemic demand and ended up overspending, reported a loss for two consecutive quarters earlier this year, announced plans to lay off 10,000 workers (the biggest layoff in the company’s history) and the share price is down 45% year to date.
For years, Amazon has been pushing Amazon Alexa – their voice assistant – in a battle with Google’s Assistant and Apple’s Siri to capture market share. But reports are that Alexa is falling out of favour at the eCommerce giant.
Since launching in 2014, Alexa has not yet managed to create an ongoing revenue stream. So outside of hardware sales, the division doesn’t make a lot of money. In just the first quarter of 2022, Alexa’s division within Amazon lost $3 billion and is on track to lose $10 billion for the year.
Reports are that Alexa was a “pet project” of Jeff Bezos when he was running the company. But with a new CEO, Alexa is falling out of favour.
And to be fair to Amazon’s team, they are not alone. Google have expressed similar challenges with their Google Assistant. Voice assistants are hard to monetise. Studies have shown they don’t drive additional purchases, it is hard to advertise through them, and affiliate deals tested with the likes of Uber and Domino’s Pizza haven’t yielded great results.
So these tech giants are left with a situation where they have a lot of users (Business Insider put it at 81.5m US users for Google Assistant, 77.6m for Apple’s Siri and 71.6m for Alexa) but no clear way to monetise.
This is an excerpt from our Thought Starters email. Once a week we send you 5 interesting articles that have caught our attention, to get you thinking. No spam, we guarantee.