Alexa, how can you stay relevant and stop sucking money out of Amazon?
This question is not easy to answer, and the future of Amazon Alexa has never been so uncertain. In November, Business Insider reported that Alexa “and other devices”were set to lose $10 billion to Amazon in 2022. Such large losses highlight the ongoing question: How are voice assistants supposed to make money? This is a dilemma that other voice assistants struggle with as well.
In the case of Alexa, which has been integrated into various Amazon-branded products from speakers and smart displays to home robot and microwave oven, its best chance of survival all along has been right under our noses or in our living rooms.
But it’s still far away.
Problems with Alexa from Amazon
Since its introduction in 2014, Amazon Alexa, like competing voice assistants, has struggled to make money and provide value to consumers beyond basic tasks like providing weather forecasts. Alexa troubles escalate: Business Insider reports “the vast majority”of the $3 billion loss of the Amazon Worldwide Digital group (which includes Alexa, Fire TV, Echo speakers, Prime Video and more) in the first quarter of 2022. were tied to “Alexa and other devices”.
This is where people working on the side of Alexa’s business are quoted as describing the voice assistant as a “colossal failure of the imagination”and a “missed opportunity.”The roughly 2,000 layoffs that Dave Limp, head of Amazon’s hardware division told CNBC, previously affected the Alexa division.
Lack of (correct) participation
Amazon had no problem selling devices with Alexa. The company also said interaction with Alexa grew by 30 percent in 2022, with more than half of Alexa users using the voice assistant to make purchases. But it’s unclear how much money Alexa is bringing in, given reports of internal unrest over Alexa’s declining engagement.
The problem is that the applications people tend to use Alexa for, like checking to see if it’s going to rain, don’t make money, and many Alexa-powered devices seem to sell at cost. Amazon was betting that Alexa would make purchases.
Alexa is most commonly associated with smart speakers, but in this form it is ad-free and doesn’t allow for purchases since you can’t view information like images and reviews.
But there is one place where customers can browse items they might want to spend money on and use Alexa to make shopping easier: Amazon Fire TVs and streaming devices. Alexa is much easier to use for things like grocery shopping when you’re using a product with a screen.
In addition, Alexa has more options to recommend video streaming services to users. Users who don’t want to use Alexa to buy products may be more inclined to use it to find a movie to rent, for example. And if that interaction with Alexa gets you to Prime Video, it’s better for Amazon.
At the same time, the Amazon Fire TV and Prime Video businesses, which are part of the same Worldwide Digital business that is reportedly losing money, seem to be doing better than Alexa.
“Alexa, where can I watch XYZ?»
While Alexa’s position seems precarious, Amazon’s TV business is in a much better position.
On March 22, Amazon announced that it had sold over 200 million Fire TV streaming devices and proprietary TVs. In January 2022, that number was 150 million. Amazon says Fire TVs, which the company began selling in 2021, are the fastest growing segment of its Fire TV business. Last week, the company expanded sales to Mexico, Germany and the UK.
Again, Alexa isn’t the only voice assistant struggling. One of Amazon’s hallmarks in this confusing space are televisions. The most popular voice assistant manufacturers (Amazon, Apple, and Google) all make streaming devices, and Amazon and Apple have their own video streaming services. Amazon is currently the only one that sells its own brand of TVs (although there are TVs that run on the Google TV operating system). And since Fire TV and Alexa are part of the Amazon Worldwide Digital group, these businesses complement each other.