We use Alexa for little more than setting timers and music. That’s a huge problem for Amazon.

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Amazon announced that it plans to lay off about 10,000 employees. It is the biggest job cut in its history. The hangover of a non-stop party for an entire industry. Or almost all. In this case, the layoffs are focused on corporate and technology positions.

Although losses in the e-commerce business have prompted the decision to cut jobs, Alexa and Echo devices have been put in the eye of the hurricane after years developing products and platform without too many worries.

Aggressive pricing and little subsequent monetization

The New York Times on layoffs at Amazon:

[La divisi√≥n de] Devices and Alexa have long been seen internally at risk of cuts. Alexa and its devices were pushed as one of the company’s top priorities as Amazon raced to create the leading voice assistant, which leaders thought could succeed mobile phones as the next essential consumer interface. From 2017 to 2018, Amazon doubled the staff of Alexa and Echo devices to 10,000 engineers. At one point, any engineer who received a job offer for other positions at Amazon was supposed to also receive an offer for Alexa.

The company has sold hundreds of millions of Alexa-enabled devices, but Amazon said the products are often low-margin and other potential sources of revenue, such as voice shopping, haven’t caught on.

For a long time we have seen how Amazon, although it offered a wide variety of home automation devices led by speakers of all kinds of prices, especially swept away the Echo Dot line, its simplest and cheapest speaker, very often sold for half its original price or with very aggressive promotions.

A smart speaker that we could easily find for 30 euros. If we remove taxes, shipping and packaging costs from 30 euros, in addition to the cost of manufacturing and materials, how much money is Amazon left for each of these speakers? doWhat margin does the Alexa development division assume?

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Alexa, count down 12 minutes

Amazon’s interest in getting a good market share at the cost of selling extremely cheap was motivated by getting its voice assistant to penetrate. Unlike Apple and Google, Alexa didn’t have a home in almost every home in the developed world, so she had to find a way into them.

At the time of the deployment of Alexa and the Echo, there was a firm belief, and not only in Amazon but in almost the entire industry, that voice assistants were really going to be the futurewhich were going to be important in homes not only as a way to be entertained, find information or activate connected objects, but also to shop.

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Exactly five years ago, a Juniper Research report echoed by TechCrunch He was talking about that by this time, 2022, 55% of American homes would have a smart speaker. The figure that has been reached is higher, 60%. Nevertheless, With devices sold at such aggressive prices, the important thing is not to sell them, but the subsequent monetization that can be achieved with them. It does not seem that impulse purchases by voice are being a success.

In 2016, when the Echo devices were a huge hit in the United States, almost half of its users used it to add something to their Amazon shopping list. But only 10% used it on a recurring basis.

Controlling smart lights, getting informed, playing music and setting a timer, typical culinary use, were much more common use cases, both in the initial test and in periodic iteration. Especially those last two uses.

Despite the efforts of Amazon, which in fact managed to develop a great voice assistant that improves Siri or Google in many use cases, not having its own brand or its own operating system for mobile telephony (despite its unsuccessful attempt) has struggled to lag far behind its rivals in terms of installed base of supported devices. If on top of that you have not managed to get used to buying online, your monetization falters.

And that is where we arrive at an uncertain future, with layoffs in the division and a recovery of investment that is beginning to sound complicated, demolished the belief that voice assistants were going to become great protagonists of our day to day: they are accessories useful and friendly, but far from being able to compete with the smartphone.

Does it make sense for Amazon to continue to keep Alexa, which only in 2018 cost him a loss of $5 billion.or in a while the Echo will lose a large part of its functionality?

What happens next with the Echo and Alexa, and how Amazon manages to monetize its installed base, will be crucial to its long-term future.

Amazon announced that it plans to lay off about 10,000 employees. It is the biggest job cut in its history.…

Amazon announced that it plans to lay off about 10,000 employees. It is the biggest job cut in its history.…

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