Amazon is currently in the middle of one of its history’s most significant mass layoffs. The e-commerce giant plans to terminate about 10,000 people by 2023 and refocus finances and efforts away from the hardware division. The Alexa team at Amazon, responsible for not only the voice assistant but the devices as well, is one of the hardest hit divisions, with more than half of all employees in the vertical either being reassigned or terminated.
Amazon will be losing about $10 billion this year because of Alexa. Alexa, a pet project by Jeff Bezos, was one of the best voice assistants launched almost a decade ago. However, Amazon, like Google, hasn’t been able to monetize its voice assistant services in any meaningful way.
Moreover, the intelligent assistant takes up a lot of space and computing power in Amazon’s server. With each passing year, it was becoming difficult for Amazon to justify the area that that program takes up on its servers and the amount of computing power it occupies.
This happened even though Amazon could place Alexa in several devices and hardware that were not the Echo speakers. Also, Alexa’s Echo line is among the “best-selling items on Amazon.” However, most of the devices are sold at cost.” The plan with Alexa was for Amazon to want to make money when people use the devices, not when they buy bought them. This has colossally backfired on the e-commerce giant.
According to a report by Business Insider, the Alexa division and Prime Video lost about $3 billion in just the first quarter of 2022, with a vast majority of the losses coming from the Alexa division. As we said, the hardware team will lose about $10 billion this year.
The Alexa division has been trying to turn around the monetization of assistance services for years. An all-hands crisis meeting took place in 2019 to try to turn the monetization problem around, but that was futile.
As a result, Amazon stopped hiring people for the Alexa division in late 2019. Bezos, too started to lose interest in his pet project around 2020. Bezos’ successor as Amazon’s CEO, Andy Jassy, is also not interested in protecting Alexa.
Jassy has claimed that the company still has “conviction in pursuing” Alexa, but that’s after making significant cuts to the Alexa team. However, the Alexa division believes that there is no clear directive for devices in the future and that since the hardware isn’t profitable, there’s no clear incentive to stay in that direction.