Alexa would be a money pit for Amazon and it's your fault (or not)

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Amazon is a pioneer in the connected home. Indeed, its Alexa voice assistant, as well as the first Amazon Echo speaker, were released in 2014. And this allowed the e-commerce giant to position itself as one of the leaders in the connected speaker market. Indeed, the Alexa assistant is today used in many homes around the world. By 2023, the number of Alexa-connected devices sold would exceed 500 million. However, if Alexa is extremely popular, despite the fact that Amazon does not have smartphones, this assistant and associated products would be a money pit for the e-commerce giant. In any case, this is what is suggested by an article in the Wall Street Journal, which is relayed by TechRadar.

How is this possible ?

According to the Wall Street Journal's explanation, Amazon bet on the fact that it could sell its Alexa-connected products at reasonable prices, and that it could then generate revenue from online purchases that users would make through those devices. However, Amazon would have poorly anticipated user behavior. And according to documents mentioned by the WSJ, the Amazon division which markets Alexa-related products would have accumulated $25 billion in losses between 2017 and 2021.

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The problem is that Alexa's e-commerce features haven't really taken off. Instead, users are reportedly using the assistant's free features instead. “We were worried that we'd hired 10,000 people and built a smart alarm clock,” a former employee was quoted as saying by the American newspaper. This view is contested by Amazon, however, with a representative quoted by the Wall Street Journal as saying: “Hundreds of millions of Amazon devices are used by customers around the world, and for us, there is no greater measure of success.” Amazon also claims that more than half of Amazon Echo users have used the products to make online purchases.

Generative AI: A New Source of Revenue?

In any case, the Amazon division that produces Alexa-connected devices could soon benefit from a new source of revenue: a paid version of Alexa. Like Apple, Google or Microsoft, the e-commerce giant is also developing generative artificial intelligence. And it is notably preparing a new version of the Alexa assistant which, thanks to recent developments in AI, will be able to have more fluid discussions with the user. However, many rumors suggest that this improved version of Alexa could be paid.

• Amazon is a pioneer and market leader in connected speakers
• In addition, it has already sold more than 500 million Alexa-connected devices
• However, according to the Wall Street Journal, the division that produces these devices would have recorded losses of 25 billion dollars between 2017 and 2021
• Currently, Amazon is preparing an improved version of Alexa that relies on generative AI and this improved version could be paid, according to several media outlets

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