Tuesday, November 22, 2022

Report: Amazon Is Gutting Its Voice Assistant, Alexa

Alexa is reported to be on life support. 

When the voice assistant first launched in November 2014, publications called it the "computer of the future." CNET described it as something out of the sci-fi series "Star Trek." Computerworld heralded the product as the "future of every home."

Nearly 10 years since, the voice assistant hasn't lived up to Amazon's expectations, reports Insider.

During the first quarter of this year, Amazon's "Worldwide Digital" unit, which includes everything from the Echo smart speakers and Alexa voice technology to the Prime Video streaming service, had an operating loss of over $3 billion, according to internal data obtained by Insider.

The vast majority of Worldwide Digital's losses were tied to Amazon's Alexa and other devices, a person familiar with the division told Insider. The loss was by far the largest among all of Amazon's business units and slightly double the losses from its still nascent physical stores and grocery business.

While Amazon's business model has traditionally tolerated this kind of poor financial performance from its hardware businesses, that's no longer true. Amazon's Alexa and the devices team at large is now the prime target of the biggest layoffs in the company's history, according to press reports and an internal email seen by Insider.

Insider spoke with over a dozen current and former employees on the company's hardware team to get a better picture of its current condition. They described a division in crisis. While Alexa was once one of the company's most rapidly growing projects, the mounting losses and massive job cuts underscore the swift downfall of the voice assistant and Amazon's larger hardware division.

It also punctuates the failure of the company's much-replicated business model of selling devices at cost and to recuperate revenue from additional purchases later.

Employees spoke under the condition of anonymity because they weren't authorized to speak with the press. Their identities are known to Insider.

"Alexa is a colossal failure of imagination," one former employee said. "It was a wasted opportunity."

While Amazon didn't respond to Insider's questions about the health of its devices and voice-assistant business, Amazon's senior vice president for devices and services, David Limp, said in a statement, "We are as committed as ever to Echo and Alexa, and will continue to invest heavily in them."

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