Amazon devices unit on track to lose $10 b-b-b-billion!

[icanhazmac]

Amazon Alexa on track to lose $10 billion this year, described as 'colossal failure' in new report

Amazon's voice assistant Alexa is part of a devices unit at the company that is expected to lose about $10 billion in 2022, according to a new report.

www.foxbusiness.com

But siri sucks and Apple is stupid for the price of homepods, etc. Last I checked Apple wasn't laying off 10,000 workers. Siri might not be as capable but at least it isn't that money pit of privacy rape. Maybe the losses come from their investments in Prime Video but my guess is the only time they sell devices is PrimeDay and Black Friday and at a huge loss.

 

[maflynn]

I like this article a bit better Ars Technica

The long and short of it, is that
1. IT was a pet project of Bezos, so he wasn't concerned about its losses when he ran Amazon, now he doesn't.
2. They sell the Alexa units at cost, with the mind set of monetarizing the usage
3. They couldn't figure out how to monetarize it, people don't want to buy something by way of alexa sight unseen, plus giving such a thing access to your credit card, and having items bought unintentionally is a mistake waiting to happen.

The Ars article mentions Apple, and how their philosophy was/is superior. While the original homepod largely flopped, the idea of selling it with a profit margin in the long run was better.

I think the bloom is off the rose with voice assistants. I have a homepod and one or two Alexa units. We still use the homepod, just to listen to music, but the Alexa units are packed up somewhere. Not because we don't like them, but they just fell into disuse.

 

[Jessica Lares]

Yeah, even if you use Siri, the speakers on the iPhones and iPads keep getting better, and have been great for a long time now, so you don't even really need to buy a speaker to play a podcast/etc, and there's a benefit to them being something you can carry around and use anywhere. It's probably the same with Android.

 

[wonderings]

I am very happy with my Amazon Echo's. I have a bunch throughout my house and they work very well. Siri is at the bottom when it comes to voice assistants, you can't deny it no matter if Amazon is losing money or not, it does not change that Apple has seriously lagged behind on Siri which if memory serves me was basically the first big voice assistant to be released and everyone else followed.

Amazon did spend a billion dollars on that disaster of a show Rings of Power so we can account for a portion of that 10 billion dollar loss

3. They couldn't figure out how to monetarize it, people don't want to buy something by way of alexa sight unseen, plus giving such a thing access to your credit card, and having items bought unintentionally is a mistake waiting to happen.

Alexa is not set by default to let you buy things with your voice, pretty sure you have to go and enable that feature. It is not something I use, but could see it being useful if you did some regular shopping for necessities at Amazon. Like saying you need toothpaste, toilet paper. razors, etc, would be great if you relied on online ordering for those things.

 

[maflynn]

Alexa is not set by default to let you buy things

You kind of missed my point.
Amazon is selling these at cost, so they're not making money on the sale of the units. They did this with the idea of being able to make money on its usage. They could not never figure out how.


From the article (BI is Business Insider publication)

The BI report spoke with "a dozen current and former employees on the company's hardware team," who described "a division in crisis." Just about every plan to monetize Alexa has failed, with one former employee calling Alexa "a colossal failure of imagination," and "a wasted opportunity."

the hope was that people would buy things on Amazon via their voice. Not many people want to trust an AI with spending their money or buying an item without seeing a picture or reading reviews.

Edit: My point is that Amazon failed to make money on these. Regardless of its popularity, Amazon is not reaping any profits from the sales or use.

 

[russell_314]

Edit: My point is that Amazon failed to make money on these. Regardless of its popularity, Amazon is not reaping any profits from the sales or use.

I think they indirectly profit from these things. Getting an Amazon device into your home with the ability to sell you things and it also puts the Amazon name in your head. That's a big thing with sales. If you get the sudden urge to buy a widget, the first thing you're going to think of is where can I go to get a widget. Amazon wants you to think I can tell Alexa to send me one or even just buy one with their app.

With the economy going south companies are looking for fat to cut. I have a feeling Amazon knew this was going to be a loss but didn't care. Now that the belt is tightening they care.

 

[maflynn]

I think they indirectly profit from these things. Getting an Amazon device into your home

The halo effect - the article does mention that and I'm sure there was some of that going on, just not to the extent that Amazon needs to justify the product.

" The team also tried to paint Alexa as a halo product with users who are more likely to spend at Amazon, even if they aren't shopping by voice, but studies of that theory found that the "financial contribution" of those users "often fell short of expectations."

 

[russell_314]

The halo effect - the article does mention that and I'm sure there was some of that going on, just not to the extent that Amazon needs to justify the product.

I guess Amazon knows what they're doing but I think just the fact that the Amazon Echo was produced gave them name recognition. Even for someone like me that doesn't own one I know about them so that makes me think of Amazon. I like to think this is just belt tightening due to the economy rather than some direction Amazon is deciding to go.

What I really hope doesn't happen is Amazon decides to abandon the Echo. That would be terrible because Google would fill in that vacuum and let's face it the HomePod is barely hanging on. I think that would be th end of HomePod. I hope what happened with Google taking over web browsers doesn't happen to home assistants. That would be sad

 

[cardfan]

Amazon Alexa on track to lose $10 billion this year, described as 'colossal failure' in new report

Amazon's voice assistant Alexa is part of a devices unit at the company that is expected to lose about $10 billion in 2022, according to a new report.

www.foxbusiness.com

But siri sucks and Apple is stupid for the price of homepods, etc. Last I checked Apple wasn't laying off 10,000 workers. Siri might not be as capable but at least it isn't that money pit of privacy rape. Maybe the losses come from their investments in Prime Video but my guess is the only time they sell devices is PrimeDay and Black Friday and at a huge loss.

I’ve had an echo since day one it was released. In fact it’s the only one I have and still have. Does great in some things such as timers, turning off things, etc. but I’ve never used it to buy something on Amazon and have no desire to do so. Though Amazon has really tried. Annoyingly so.

 

[maflynn]

I like to think this is just belt tightening due to the economy

I don't think losing 10 billion is due to a slowing economy. It sounds like this platform never made money for Amazon and some point a company has to take a hard look at its product portfolio and decide where its resources are best used

Back in the day, when Jobs returned he killed a lot of projects - Apple was in a more precarious position to be sure, but there were a lot of very cool initiatives like OpenDo and the Newton

Again from what we're hearing, the division is in turmoil and it sounds awfully like a solution in search of a problem. I enjoy my Homepod, and as I've said I own some Alexa units. The latter is collecting dust but when I had them active, they only played music, just as the homepod now does. I think my usage is that of a typical consumer. Just play music and a few other minor tasks, all of which doesn't put money in Amazon's pockets.

 

[wonderings]

You kind of missed my point.
Amazon is selling these at cost, so they're not making money on the sale of the units. They did this with the idea of being able to make money on its usage. They could not never figure out how.


From the article (BI is Business Insider publication)



Edit: My point is that Amazon failed to make money on these. Regardless of its popularity, Amazon is not reaping any profits from the sales or use.

I get that and don't see anything all that abnormal with the approach. Amazon has money to burn and they are making/made an attempt at becoming the name for house hold virtual assistants. With how I use them I am not sure how they would make money off of me outside of my Amazon music subscription. Meta is doing this with the Quest 2 VR headset. Not a good comparison as they are both going after different things, but both companies have a lot of money and are burning it to try and do something. Both could be huge failures and would could eventually tank Meta. I don't see Amazon going anywhere even with that loss.

 

[maflynn]

Amazon has money to burn

It does, however with them laying off 10,000 people and with reports that the Alexa division being one of the hardest hit. Plus with word saying how that division is in crisis mode the writing is on the wall imo, i.e., they're no longer willing to burn through 10 billion dollars a year on something that seemingly has no way of generating profits.

Edit: I just want to put out there imo, that while Amazon (like facebook and google) certainly can keep a money losing product going, they appear unwilling to keep writing blank checks.

 

[sorgo †]

This is awesome news!!

 

[theluggage]

The Ars article mentions Apple, and how their philosophy was/is superior. While the original homepod largely flopped, the idea of selling it with a profit margin in the long run was better.

I suspect that Homepod flopped because everybody seemed to be reviewing it as a "home assistant" and comparing it with sold-at-cost products from Amazon* and Google** - instead of as an "audiophile" speaker with a voice assistant thrown in. The Homepod didn't look so expensive when you compared it with high-end Bluetooth speakers from the likes of Bose, Naim or even Sonos (although some of those have since released cheaper speakers, possibly as a response to Amagoogle).

I wouldn't want a Homepod because I don't have a 100% Apple ecosystem (and already have better speakers where it counts) but if you were all-in with the iStuff they seemed like a good enough product... Apple certainly seem to know how to make speakers sound bigger than they are...

* Paid for by selling you groceries
** Paid for by selling you... Er, no, wait, paid for by selling you.

 

[maflynn]

I suspect that Homepod flopped because everybody seemed to be reviewing it as a "home assistant" and comparing it with sold-at-cost products from Amazon* and Google**

Oh no question, and I think even apple fell into that trap as we all expected an Alexa competitor. I like my OG homepod, but then my needs are incredibly modest. Its been playing Christmas Carols today.

 

[LIVEFRMNYC]

I have the Amazon Echo Dot with the led display. I only use it to for timers, alarms, and Amazon shipping notifications.
The led display makes a huge difference. I don't have to keep asking Alexa how much time is left. Alexa can be a little chatty at times for no reason. Like shut the hell up and just do what I tell you to. 😂

I like the sound of my pair of HomePod Mini. I only use it for my Apple TV and my TV speakers using the Beta passthrough feature. Works great. Although I wish it had Dolby Sound, but the sound is damn good regardless. Also use for alarms.

I use my Google home mini for my Phillips lights and alarms. Google home is the only one that gets like lights exactly how I want it to be. If I ask Siri or Alexa to turn the lights white (or any other color), it would bring the lights to a different variation of white (or any other color). So when it comes to lights, I only use Google.


If Amazon stops making the Echo line, I think a lot of users would be highly upset.

 

[1885507]

Amazon is great at moving and shipping products around the world at discount prices, albeit on the backs of people having to relieve themselves in bottles.

Actually building things that people want to buy and remain useful, however, remains Amazon's true Achilles heel.

A visit to any local Amazon Fresh, especially one with the alpha-no-beta-no-it's-still-alpha "Just Walk Out" technology demonstrate how big the heel truly is.

 

[Shanghaichica]

You kind of missed my point.
Amazon is selling these at cost, so they're not making money on the sale of the units. They did this with the idea of being able to make money on its usage. They could not never figure out how.


From the article (BI is Business Insider publication)



Edit: My point is that Amazon failed to make money on these. Regardless of its popularity, Amazon is not reaping any profits from the sales or use.

I have a bunch of these around my house, very useful but I agree they are not making any money on them. I would actually wager to say they are often selling them at a loss, with how often they go on sale. They are selling echo dots regularly for under £30 sometimes under £20 how are they even selling these at cost. I would say they are having too many sales. I very rarely buy any Amazon devices at full retail price because I know it will go on sale again within a month. The only two Amazon devices I’ve bought at full retail price since 2014 was the echo show 15 and the new kindle scribe. Everything else I bought when on sale. I think their problem was that they sold these things too cheaply. Now people wouldn’t even be willing to pay a fair price for them. With Apple devices I know I have to pay up for them. Yes they may have a sale here and there but they aren’t being sold at bargain basement prices and when I want an Apple device I buy it there and then I don’t wait to see if I can get it cheaper within a few weeks.

 

[Frostbear44]

I have a bunch of these around my house, very useful but I agree they are not making any money on them. I would actually wager to say they are often selling them at a loss, with how often they go on sale. They are selling echo dots regularly for under £30 sometimes under £20 how are they even selling these at cost. I would say they are having too many sales. I very rarely buy any Amazon devices at full retail price because I know it will go on sale again within a month. The only two Amazon devices I’ve bought at full retail price since 2014 was the echo show 15 and the new kindle scribe. Everything else I bought when on sale. I think their problem was that they sold these things too cheaply. Now people wouldn’t even be willing to pay a fair price for them. With Apple devices I know I have to pay up for them. Yes they may have a sale here and there but they aren’t being sold at bargain basement prices and when I want an Apple device I buy it there and then I don’t wait to see if I can get it cheaper within a few weeks.

How do you find it? Use my iPad Pro 12.9 and mini 6 for writing notes and some reading, but I’ve sort of fallen in love with the Scribe! Thought I’d return it but now not so sure!

 

[Abazigal]

You kind of missed my point.
Amazon is selling these at cost, so they're not making money on the sale of the units. They did this with the idea of being able to make money on its usage. They could not never figure out how.

Which raises the question - in what bizarro world do you release a product first without having any clear idea of how you are going to monetise it later? What executive would in their right mind green light a project that is projected to incur huge losses from the onset, and the path to monetisation is a grey area along the lines of "we will figure something out along the way"?

Some of the projected use cases sound equally hare-brained. Like who in their right mind would bother trying to order toilet paper via voice control (with all the many things that could go wrong along the way) when you already have the app on the smartphone?

What's even more amazing is the number of people proclaiming smart speakers as the next computing paradigm.

Just so many bad takes in the last half a decade.

 

[maflynn]

Which raises the question - in what bizarro world do you release a product first without having any clear idea of how you are going to monetise it later?

Its not bizarre, Its very much the state of startups. Pick any startup and their mentality is to grow first and make money second. Uber, Carvana, AirBnb, Instacart, tiwitter. They all started by losing money and not having a set path of monetization.

 

[Shanghaichica]

How do you find it? Use my iPad Pro 12.9 and mini 6 for writing notes and some reading, but I’ve sort of fallen in love with the Scribe! Thought I’d return it but now not so sure!

I love mine. Much easier on the eyes than my smaller kindles and I love writing on it. I have an iPad mini 6 and iPad Pro and never really took to making notes on them with my Apple pencil. However I love the feel of writing on my scribe.