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Amazon’s unit that focuses on Alexa-powered devices lost $25 billion between 2017 and 2021, the Wall Street Journal (WSJ) reported this week.
Amazon says it has sold more than 500,000,000 Alexa devices, adding Echo speakers, Kindle readers, Fire TVs and streaming devices, as well as Blink and Ring home security cameras. But since its debut, Alexa, like other voice assistants, has struggled to make money. In late 2022, Business Insider reported that Alexa would lose $10 billion that year.
The WSJ said it received $25 billion in “internal documents” and could not take losses on the Devices business before or after the distribution period.
The WSJ report claims to offer insight into how it is possible that devices have lost so much money for so long.
On the one hand, it appears that the business unit has been given some leeway in terms of monetary good fortune for the sake of innovation and long-term profit potential. Someone the WSJ described as “a former long-time device executive” said that when Alexa started, Amazon’s device team “didn’t have a benefits program” when it introduced the devices. products.
Amazon has been known to sell Echo speakers cheaply or at a loss in hopes of making money from Alexa in the future. In 2019, Dave Limp, then senior vice president of Amazon Devices, who left the company last year, told the WSJ, “We don’t have to make cash when we sell the device to you. “The WSJ noted that this policy also applies to other unspecified Amazon devices.
People tend to use Alexa for free services, such as checking the time or time, without making large purchases.
“We were worried that we had hired another 10,000 people and built a smart stopwatch,” one former senior executive told the WSJ.
An Amazon spokesperson told the WSJ that more than a portion of people who own an Echo have made purchases with it, but declined to provide further details. However, according to “former employees of the Alexa sales team” that WSJ spoke with, the amount of Alexa-related sales profits is negligible.
In an emailed statement, an Amazon spokesperson, Ars Technica, in part:
In the Devices & Services division, we focus on the price we create when consumers use our services, not just when they buy our devices. Our Devices & Services organization has built many successful businesses for Amazon and is well placed to continue to do so in the future.
Difficulties in promoting security and other services, as well as restricting ad sales because they annoy Alexa users, have also hampered Alexa’s revenue, the WSJ reported.
Massive losses do not seem to slow down the progression of output either. The WSJ claimed that the Devices business lost more than $5 billion in 2018, but still spent cash to expand the Astro client robot. This robot is not yet generally available, although a professional edition is in progress just 10 months after its release. Amazon Halo fitness trackers, which were also blocked, and Luna game streaming devices also evolved in 2019, when the hardware unit lost more than $6 billion, according to the WSJ.
Amazon has laid off at least 19,000 workers since 2022, and the Devices department has been hit hard.
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