One of Amazon’s most iconic products has turned out to be a major money drain, newly unearthed documents show.
The retail giant invested in Alexa voice technology in its relatively cheap Echo speaker products in the hopes people would use it to order more products online.
But this is said to have backfired dramatically – with new market research showing customers see the AI voice assistant as a secretary and mostly use it for free apps like setting their alarms and checking the weather.
‘We worried we’ve hired 10,000 people and we’ve built a smart timer,’ a former senior employee told the Wall Street Journal.
Sources shared internal documents with the newspaper showing that between 2017 and 2021, Amazon suffered more than $25 billion in losses from its devices business.
One of Amazon’s most iconic products has turned out to be a major money drain, newly unearthed documents show. (Pictured: Amazon founder Jeff Bezos and his fiancée Lauren Sanchez in Sun Valley, Idaho earlier this month)
Amazon’s Echo smart speakers – powered by their Alexa voice assistant – have not proven a money-spinner for the e-commerce giant, according to a new report
Amazon spent billions on devices including Echo, Kindles, Fire TV Sticks and video doorbells, according to people familiar with the business.
The cheapest Echo lists for around $40, but far more sophisticated versions involving color screens can run into hundreds of dollars.
As part of a plan to recoup the losses, Amazon chief executive Andy Jassy is planning to launch a smarter, paid-for version of Alexa this year.
The revamp of the voice assistant will likely be called Alexa Plus, but there is no clue yet on the price. It could be bundled with a Prime subscription.
The new and improved Alexa will be fitted with a ‘conversational generative AI’, it says – although it’s unclear what AI model this will actually be.
It means she will be able to respond faster and in more human-like language in response to complicated prompts or queries.
Known internally as ‘Banyan’, Amazon’s new project would represent the first major overhaul of the voice assistant since it was introduced in 2014 along with the Echo line of speakers.
Some of the Amazon employees who have worked on the project say Banyan represents a ‘desperate attempt’ to revitalize the Alexa service, which has never turned a profit.
Sources shared internal documents with the newspaper showing that between 2017 and 2021, Amazon suffered more than $25 billion in losses from its devices business
Amazon has pushed workers towards a deadline of August to prepare the newest version of Alexa, the sources added, but it’s unclear when it could be released.
Researchers from Oxford and Stanford University found last year that Alexa users trust the voice assistant because they see it as a secretary rather than a machine.
When discussing it in a positive light, users would refer to Alexa as ‘she’ and ‘her’ – but when speaking about the device in the context of the technology giant they would use ‘it’ instead.
Professor Ekaterina Hertog of Oxford said: ‘This unstable use of pronouns potentially reflects users’ attempt to separate Alexa from Amazon deeming Alexa ‘trustworthy enough’ while continuing to distrust its parent company.’
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