12 ms·

Amazon Alexa is a “colossal failure,” on pace to lose $10B this year

52 points by arunbahl 4y ago

jasec57322 4y ago
How is it a "colossal failure"? Amazon has tens of millions of these devices which are a 24/7 microphone, and with the wireless transceivers even more data-collection capabilities. THe data is worth more than $10-billion alone.
- pocketarc 4y ago
  I think the problem is that they have no consent to collect or use any of that data, and if they were caught collecting/using it, they’d end up in massive legal trouble. Just because it’s technically possible doesn’t mean it’s actually possible.
  - jasec57322 4y ago
    When you say 'any of that data', you are incorrect. Simply to function (voice recognition) the echo microphone is constantly on, in the same way that any input device needs to be on to function. You're not only incorrect, but your comment goes on to be incoherent, did you think before writing this comment?: 'Just because it’s technically possible doesn’t mean it’s actually possible.'
melling 4y ago
$10 billion seems like a lot a money for an 8 year old product that hasn’t changed much.
- smt88 4y ago
  Hardware is incredibly expensive, and Amazon is selling most of it below what it costs to make it. But yes, more than $1B a year seems high.
  - MonkeyMalarky 4y ago
    Their hardware division seems cursed. I wonder how long that vacuum robot acquisition will last.
  - spaceman_2020 4y ago
    What's the objective of running these loss making businesses? If it's to funnel users to Amazon's e-commerce store, that doesn't seem like a great decision since the e-commerce store doesn't make money either. And I can't see enterprise cloud decisions being swayed much by Amazon's consumer business. Spending money on a loss making product so that you can funnel people to another loss making business seems...counterintuitive?
    - bendews 4y ago
      Amazon (the marketplace) invests it's revenue aggressively, although this serves as a loss on paper there is still a benefit to generating that revenue in the first place as it serves as investment dollars for other parts of the business
    - over_bridge 4y ago
      Sometimes it's to capture the market: kill all competitors with a price they can't match and then jack up the price once you've achieved monopoly. Kind of a gross practice that is only possible when you've got a huge budget and no need to self fund.
      - ngcc_hk 4y ago
        It is the original playbook for many startup and it all started from Amazon?
    - mjjjjjjj 4y ago
      I think Kindle might be the ideal situation for this kind of strategy, as I imagine ebooks have healthy margins, the store lock-in isn’t total or even that inconvenient but it’s enough to funnel sales their way most of the time, and I imagine the continuing development costs are minimal compared to a more full featured tablet or a program like Alexa. Unfortunately most things aren’t an easy commodity to work with like chunks of the written word.
- ryan93 4y ago
  Yeah I’d love to know where the money is actually going. Is it just an accounting thing? You could pay 40,000 people a quarter million a year!
  - empressplay 4y ago
    I think they're including what they would charge someone else for compute and traffic, if someone else ran Alexa.
    - ryan93 4y ago
      Thank you so I guess it’s partially an accounting thing and they aren’t actually shelling out 10B in cash on it.
    - BonoboIO 4y ago
      That makes sense. The credit card invoice with nearly 1 billion dollars every month must be the deal. :-D
  - danrocks 4y ago
    Just to train the ML models used in the NLU, ASR, and other ML-based platforms, I heard the number of $150m/year when I worked there.
davnicwil 4y ago
The point about the vast majority of Alexa interactions being trivial and repeated things that aren't monetizable rings true with me. When I've used one it's been for exactly two useful things: timers while cooking and weather, and one frivilous thing: jokes. It's valuable enough for those things to be honest, given the purchase price, but yeah there is no feasible way to make ongoing revenue from them. I just can't think of anything else I want to use one for, if I could I probably would have.
- prmoustache 4y ago
  I never understood the appeal of those things. Everybody who own one of those already own a smartphone whith the exact same voice assisted functions.
  - serf 4y ago
    I think there is something to the idea of a beacon in common rooms rather than a cell phone. When i'm at home I rarely have my phone with me. If I am in the kitchen and I need a timer initiated it's simply easier for me to speak the command out loud than it is for me to traipse to the next room for the phone. Now, if the argument is "I don't know why we need so many competing services that do the same thing." , I agree. I wish that there was an Echo equivalent that just acted as a dumb thin-ware style client connected to my mobile phone via wifi or whatever that was there only to act as a microphone bridge, with all the heavy work being accomplished by the mobile phone.
    - watwut 4y ago
      I use timer buil in into cooker or oven. Not voice activated, but super practical anyway.
      - c22 4y ago
        Man, and here I am just looking at the wall clock every once in awhile. Honestly if you just stay engaged with the world around you and mindful while you're doing things you develop a strong internal sense of time-passing that makes external crutches unnecessary for most tasks. With a little practice you can get to a similar point with the weather too.
mc32 4y ago
Looks like MS saw this coming a mile away when they pulled back on Cortana. What was MS seeing that Amazon didn't, or was it pure luck?
- laidoffamazon 4y ago
  The difference is Cortana was an inferior product!
  - mc32 4y ago
    So it’s worse because they didn’t sink $10MMM into it. I think that shows they knew when to cut their losses and not throw more money down the drain.
cheriot 4y ago
> Google Assistant at 81.5 million users, Apple's Siri at 77.6 million, and Alexa at 71.6 million That's a lot of scale before figuring out there's no way to profit!
- raverbashing 4y ago
  Yeah. And Apple and Google didn't need exclusive hardware for it I think it was an outburst of optimism? Or just finding new ways of selling to people
  - miscaccount 4y ago
    i think its FOMO No one wants to lose market share because they are too late. Everyone keeps telling about android and Iphone and how blackberry, nokia and windows lost
  - acdha 4y ago
    Voice assistants were really talked up for a while back then. Lots of future of computing claims, the big consulting companies were saying it’d be integral to business (the only way cubicle farms could get worse?), etc. For Amazon, that’s something of a threat: Apple, Google, and Microsoft would be well positioned as OS vendors and there is certainly room to imagine that putting Amazon at a disadvantage similar to what non-default search engines faced (remember A9?), not to mention the value of making it as easy as possible to order things. What I don’t understand is what all of these people were working on. The hardware isn’t bad but it’s not that kind of investment, and the software doesn’t seem to have improved in years (which seems to be true for the entire field - tons of people using them, mostly for the simple stuff Steve Jobs did in the first Siri demo a decade ago). I’m assuming there were projects which haven’t seen the light of day and quite likely never will, and that there’s probably a great inside story about strategic failures locked up behind NDAs.
    - throwaway_4ever 4y ago
      Notice a difference between the first Echo from 2015 and today’s? No? Well they still had us rewrite the entire OS, not once, but twice, and maintain all three OS’s across 10+ different devices… They did the same damn thing with the API to cloud servers. Every couple years, new deprecation and new way to do things. Promo driven development out the wazoo while ironically quoting “customer obsession” Zero ability to influence direction as IC. All top down initiatives from directors planned a year in advance.
zappzoom 4y ago
5 years ago, Amazon saw the sales figures and thought their smart speaker business was the bee's knees. The Alexa org had thousands of open roles. There was all kinds of talk about how smartspeakers would be the next smartphones. They went all in. There may be an important lesson here, to understand the limits of your markets. They could have made a killing if they had taken the win and developed it slowly, rather than doubling down and letting their bet ride.
boplicity 4y ago
Maybe the silver lining here is that we can finally get a good "home assistant" that doesn't phone home. I think there's huge potential with these types of devices, but they're also really creepy; they "accidentally" send recordings back to the server surprisingly often. Maybe someone could build an assistant with trust at its core, everything happening on the device, and a hacker enabling ethos. These devices are a far cry from the independence we get from the old-fashioned desktop computer.
- dagmx 4y ago
  If you have a HomePod mini and a recent iPhone, it can do all the voice processing locally. I believe Google is also moving to that model or has, but it’s been a while since I transitioned my devices over.
nharada 4y ago
This feels like one of those things where if they had just charged more per device and tried to make it as useful/unobtrusive as possible it would have been better than trying to use it as an ad/purchase machine and subsidize the hardware. I like my Echo and would have paid more for it, especially if it wasn't always trying to sell me things via Amazon Shopping and I trusted it to not record me for advertising.
- mmmeff 4y ago
  This. Just make it a voice controller for music, lights, timers, and reminders. Everything else is fluff.
freediver 4y ago
It is hard to sell ads in voice/interactive interfaces so the scale does not matter, product has to be fantastic. But weather/music/timer is not revolutionary. It may have a shot with a more clever AI that can do cool stuff, that you would be ready to pay $5/mo for.
WheelsAtLarge 4y ago
Besides my phone, my echo is the only device I use every day. It's so useful that I would pay a monthly fee to use it. I suspect the must have subscription is coming as a way to monetarize it. I hope it won't be too high.
- Andaith 4y ago
  If you don't mind me asking, what do you do with it? We have an echo, and it's got three uses: - Alexa, add X, Y, Z to the shopping list - Alexa, set a 10 minute timer called "pies" - Alexa, turn the Bedroom/Living Room lights On/Off We had a google assistant, but they fudged the shopping list in the mobile app. It was an on-special impulse buy to switch to an Alexa to get that feature back, but I can't imagine paying a subscription just for what we use it for.
  - WheelsAtLarge 4y ago
    Here's what I can think of right now: turn on my coffee machine; which I setup to brew the previous night listen to the news listen to podcasts listen to audio books or it can read kindle books listen to local radio stations add items to shopping list listen to music Control my TV Control the lights around the house Make phone calls and use it as speaker phone get notifications on amazon orders delivered get information about local businesses look up wikipedia info get word definitions tell me the weather look up recipes Get traffic info Turn a fan on and off It's primary function is to listening to stuff. I can use my phone for all of this but using the echo is much more convenient. I don't use any of the echo skills simply because I haven't taken the time to figure out what's available. I suspect there's useful stuff there.
pcurve 4y ago
Is it me or is it a bit embarrassing to use voice commands? Not just echo but also my phone and car.
- menshiki 4y ago
  It is. I don't think I've ever used voice commands in public.
menshiki 4y ago
Any voice assistant should be a feature and not an independent product. I've never used Alexa but I use Siri daily for exactly two things - turning on/off my lights when I get home/leave and checking the weather. If Siri at any points tried to sell or advertise me anything I would simply stop using it. The problem with voice assistants is that they are too dependent on other devices for people to pay more money for them. Additionally, if you own a smartphone you already own one therefore you don't need to spend money on it at all.
physicsguy 4y ago
I have a Google Home, and the only things I ask it to do are to turn on my TV when I’ve lost the remote, play music on my HiFi via a Chromecast Audio (which they don’t sell anymore) and play different radio stations.
jakenotjacob 4y ago
It's been a build in progress since 2007 at least, according to public web scraper logs. 15 years without a stable, usable product makes this unsurprising.
adenozine 4y ago
I threw out my Alexa. I tried, I really tried, but it’s just too fucking annoying. Wake up, and then: “Alexa, good morning, what’s the weather like?” Forecast follows, which is good, but then she unfailingly launches into DID YOU ALSO KNOW you can use the Alexa app on your phone to do this and that etc etc. it’s unbelievable. Why am I being served ads from an assistant in the first place? Why can’t you just tell me the temperatures and shut up? Anyhow, I just ask Siri now, which does what I actually want, every single time.
1970-01-01 4y ago
>"We want to make money when people use our devices, not when they buy our devices." Lack of vehicle integration is the colossal failure nobody is talking about. Selling ads for brick and mortar locations you are predicted to pass (e.g. coupons for food and fuel) are completely untapped revenue streams. Imagine Alexa parsing your shopping list after analyzing your GPS route. It announces, before you leave, where to stop for the largest discounts and where to stop for the fastest pickups. Basically, they need to add "navigation" on top of "assistant". Alexa as the "driver's navigation assistant" would be an overnight success.

52 points by arunbahl 4y ago

How is it a "colossal failure"? Amazon has tens of millions of these devices which are a 24/7 microphone, and with the wireless transceivers even more data-collection capabilities. THe data is worth more than $10-billion alone.

pocketarc 4y ago
I think the problem is that they have no consent to collect or use any of that data, and if they were caught collecting/using it, they’d end up in massive legal trouble. Just because it’s technically possible doesn’t mean it’s actually possible.
- jasec57322 4y ago
  When you say 'any of that data', you are incorrect. Simply to function (voice recognition) the echo microphone is constantly on, in the same way that any input device needs to be on to function. You're not only incorrect, but your comment goes on to be incoherent, did you think before writing this comment?: 'Just because it’s technically possible doesn’t mean it’s actually possible.'

melling 4y ago

$10 billion seems like a lot a money for an 8 year old product that hasn’t changed much.

smt88 4y ago
Hardware is incredibly expensive, and Amazon is selling most of it below what it costs to make it. But yes, more than $1B a year seems high.
- MonkeyMalarky 4y ago
  Their hardware division seems cursed. I wonder how long that vacuum robot acquisition will last.
- spaceman_2020 4y ago
  What's the objective of running these loss making businesses? If it's to funnel users to Amazon's e-commerce store, that doesn't seem like a great decision since the e-commerce store doesn't make money either. And I can't see enterprise cloud decisions being swayed much by Amazon's consumer business. Spending money on a loss making product so that you can funnel people to another loss making business seems...counterintuitive?
  - bendews 4y ago
    Amazon (the marketplace) invests it's revenue aggressively, although this serves as a loss on paper there is still a benefit to generating that revenue in the first place as it serves as investment dollars for other parts of the business
  - over_bridge 4y ago
    Sometimes it's to capture the market: kill all competitors with a price they can't match and then jack up the price once you've achieved monopoly. Kind of a gross practice that is only possible when you've got a huge budget and no need to self fund.
    - ngcc_hk 4y ago
      It is the original playbook for many startup and it all started from Amazon?
  - mjjjjjjj 4y ago
    I think Kindle might be the ideal situation for this kind of strategy, as I imagine ebooks have healthy margins, the store lock-in isn’t total or even that inconvenient but it’s enough to funnel sales their way most of the time, and I imagine the continuing development costs are minimal compared to a more full featured tablet or a program like Alexa. Unfortunately most things aren’t an easy commodity to work with like chunks of the written word.
ryan93 4y ago
Yeah I’d love to know where the money is actually going. Is it just an accounting thing? You could pay 40,000 people a quarter million a year!
- empressplay 4y ago
  I think they're including what they would charge someone else for compute and traffic, if someone else ran Alexa.
  - ryan93 4y ago
    Thank you so I guess it’s partially an accounting thing and they aren’t actually shelling out 10B in cash on it.
  - BonoboIO 4y ago
    That makes sense. The credit card invoice with nearly 1 billion dollars every month must be the deal. :-D
- danrocks 4y ago
  Just to train the ML models used in the NLU, ASR, and other ML-based platforms, I heard the number of $150m/year when I worked there.

davnicwil 4y ago

The point about the vast majority of Alexa interactions being trivial and repeated things that aren't monetizable rings true with me. When I've used one it's been for exactly two useful things: timers while cooking and weather, and one frivilous thing: jokes. It's valuable enough for those things to be honest, given the purchase price, but yeah there is no feasible way to make ongoing revenue from them. I just can't think of anything else I want to use one for, if I could I probably would have.

prmoustache 4y ago
I never understood the appeal of those things. Everybody who own one of those already own a smartphone whith the exact same voice assisted functions.
- serf 4y ago
  I think there is something to the idea of a beacon in common rooms rather than a cell phone. When i'm at home I rarely have my phone with me. If I am in the kitchen and I need a timer initiated it's simply easier for me to speak the command out loud than it is for me to traipse to the next room for the phone. Now, if the argument is "I don't know why we need so many competing services that do the same thing." , I agree. I wish that there was an Echo equivalent that just acted as a dumb thin-ware style client connected to my mobile phone via wifi or whatever that was there only to act as a microphone bridge, with all the heavy work being accomplished by the mobile phone.
  - watwut 4y ago
    I use timer buil in into cooker or oven. Not voice activated, but super practical anyway.
    - c22 4y ago
      Man, and here I am just looking at the wall clock every once in awhile. Honestly if you just stay engaged with the world around you and mindful while you're doing things you develop a strong internal sense of time-passing that makes external crutches unnecessary for most tasks. With a little practice you can get to a similar point with the weather too.

mc32 4y ago

Looks like MS saw this coming a mile away when they pulled back on Cortana. What was MS seeing that Amazon didn't, or was it pure luck?

laidoffamazon 4y ago
The difference is Cortana was an inferior product!
- mc32 4y ago
  So it’s worse because they didn’t sink $10MMM into it. I think that shows they knew when to cut their losses and not throw more money down the drain.

cheriot 4y ago

> Google Assistant at 81.5 million users, Apple's Siri at 77.6 million, and Alexa at 71.6 million That's a lot of scale before figuring out there's no way to profit!

raverbashing 4y ago
Yeah. And Apple and Google didn't need exclusive hardware for it I think it was an outburst of optimism? Or just finding new ways of selling to people
- miscaccount 4y ago
  i think its FOMO No one wants to lose market share because they are too late. Everyone keeps telling about android and Iphone and how blackberry, nokia and windows lost
- acdha 4y ago
  Voice assistants were really talked up for a while back then. Lots of future of computing claims, the big consulting companies were saying it’d be integral to business (the only way cubicle farms could get worse?), etc. For Amazon, that’s something of a threat: Apple, Google, and Microsoft would be well positioned as OS vendors and there is certainly room to imagine that putting Amazon at a disadvantage similar to what non-default search engines faced (remember A9?), not to mention the value of making it as easy as possible to order things. What I don’t understand is what all of these people were working on. The hardware isn’t bad but it’s not that kind of investment, and the software doesn’t seem to have improved in years (which seems to be true for the entire field - tons of people using them, mostly for the simple stuff Steve Jobs did in the first Siri demo a decade ago). I’m assuming there were projects which haven’t seen the light of day and quite likely never will, and that there’s probably a great inside story about strategic failures locked up behind NDAs.
  - throwaway_4ever 4y ago
    Notice a difference between the first Echo from 2015 and today’s? No? Well they still had us rewrite the entire OS, not once, but twice, and maintain all three OS’s across 10+ different devices… They did the same damn thing with the API to cloud servers. Every couple years, new deprecation and new way to do things. Promo driven development out the wazoo while ironically quoting “customer obsession” Zero ability to influence direction as IC. All top down initiatives from directors planned a year in advance.

zappzoom 4y ago

5 years ago, Amazon saw the sales figures and thought their smart speaker business was the bee's knees. The Alexa org had thousands of open roles. There was all kinds of talk about how smartspeakers would be the next smartphones. They went all in. There may be an important lesson here, to understand the limits of your markets. They could have made a killing if they had taken the win and developed it slowly, rather than doubling down and letting their bet ride.

boplicity 4y ago

Maybe the silver lining here is that we can finally get a good "home assistant" that doesn't phone home. I think there's huge potential with these types of devices, but they're also really creepy; they "accidentally" send recordings back to the server surprisingly often. Maybe someone could build an assistant with trust at its core, everything happening on the device, and a hacker enabling ethos. These devices are a far cry from the independence we get from the old-fashioned desktop computer.

dagmx 4y ago
If you have a HomePod mini and a recent iPhone, it can do all the voice processing locally. I believe Google is also moving to that model or has, but it’s been a while since I transitioned my devices over.

nharada 4y ago

This feels like one of those things where if they had just charged more per device and tried to make it as useful/unobtrusive as possible it would have been better than trying to use it as an ad/purchase machine and subsidize the hardware. I like my Echo and would have paid more for it, especially if it wasn't always trying to sell me things via Amazon Shopping and I trusted it to not record me for advertising.

mmmeff 4y ago
This. Just make it a voice controller for music, lights, timers, and reminders. Everything else is fluff.

freediver 4y ago

It is hard to sell ads in voice/interactive interfaces so the scale does not matter, product has to be fantastic. But weather/music/timer is not revolutionary. It may have a shot with a more clever AI that can do cool stuff, that you would be ready to pay $5/mo for.

WheelsAtLarge 4y ago

Besides my phone, my echo is the only device I use every day. It's so useful that I would pay a monthly fee to use it. I suspect the must have subscription is coming as a way to monetarize it. I hope it won't be too high.

Andaith 4y ago
If you don't mind me asking, what do you do with it? We have an echo, and it's got three uses: - Alexa, add X, Y, Z to the shopping list - Alexa, set a 10 minute timer called "pies" - Alexa, turn the Bedroom/Living Room lights On/Off We had a google assistant, but they fudged the shopping list in the mobile app. It was an on-special impulse buy to switch to an Alexa to get that feature back, but I can't imagine paying a subscription just for what we use it for.
- WheelsAtLarge 4y ago
  Here's what I can think of right now: turn on my coffee machine; which I setup to brew the previous night listen to the news listen to podcasts listen to audio books or it can read kindle books listen to local radio stations add items to shopping list listen to music Control my TV Control the lights around the house Make phone calls and use it as speaker phone get notifications on amazon orders delivered get information about local businesses look up wikipedia info get word definitions tell me the weather look up recipes Get traffic info Turn a fan on and off It's primary function is to listening to stuff. I can use my phone for all of this but using the echo is much more convenient. I don't use any of the echo skills simply because I haven't taken the time to figure out what's available. I suspect there's useful stuff there.

pcurve 4y ago

Is it me or is it a bit embarrassing to use voice commands? Not just echo but also my phone and car.

menshiki 4y ago
It is. I don't think I've ever used voice commands in public.

menshiki 4y ago

Any voice assistant should be a feature and not an independent product. I've never used Alexa but I use Siri daily for exactly two things - turning on/off my lights when I get home/leave and checking the weather. If Siri at any points tried to sell or advertise me anything I would simply stop using it. The problem with voice assistants is that they are too dependent on other devices for people to pay more money for them. Additionally, if you own a smartphone you already own one therefore you don't need to spend money on it at all.

physicsguy 4y ago

I have a Google Home, and the only things I ask it to do are to turn on my TV when I’ve lost the remote, play music on my HiFi via a Chromecast Audio (which they don’t sell anymore) and play different radio stations.

jakenotjacob 4y ago

It's been a build in progress since 2007 at least, according to public web scraper logs. 15 years without a stable, usable product makes this unsurprising.

adenozine 4y ago

I threw out my Alexa. I tried, I really tried, but it’s just too fucking annoying. Wake up, and then: “Alexa, good morning, what’s the weather like?” Forecast follows, which is good, but then she unfailingly launches into DID YOU ALSO KNOW you can use the Alexa app on your phone to do this and that etc etc. it’s unbelievable. Why am I being served ads from an assistant in the first place? Why can’t you just tell me the temperatures and shut up? Anyhow, I just ask Siri now, which does what I actually want, every single time.

1970-01-01 4y ago

>"We want to make money when people use our devices, not when they buy our devices." Lack of vehicle integration is the colossal failure nobody is talking about. Selling ads for brick and mortar locations you are predicted to pass (e.g. coupons for food and fuel) are completely untapped revenue streams. Imagine Alexa parsing your shopping list after analyzing your GPS route. It announces, before you leave, where to stop for the largest discounts and where to stop for the fastest pickups. Basically, they need to add "navigation" on top of "assistant". Alexa as the "driver's navigation assistant" would be an overnight success.