Amazon is on pace to lose $10 billion this year from Alexa and other devices
- Amazon is on pace to lose $10 billion this year on some devices, include its voice assistant Alexa.
- Employees on the Alexa voice-technology team are reportedly the primary target of layoffs at Amazon.
Amazon's voice assistant, Alexa, once one of its most quickly growing projects, is now one of its products on pace to lose the company around $10 billion this year.
In the first quarter of this year, the "Worldwide Digital" unit at Amazon, which includes Alexa, Echo devices, and its streaming service Prime Video, had a $3 billion operating loss, internal data obtained by Insider showed. Most of the loss was due to Alexa and other Amazon devices, a person familiar with Worldwide Digital previously told Insider.
The voice assistant was Jeff Bezos's brainchild, and he supported the team working on Alexa, engaging himself in developing it and reviewing email marketing campaigns for it, someone directly involved previously told Insider.
When Alexa launched in 2014, Amazon wanted to make sales through people using Alexa, not necessarily through people buying the Echo devices that have the Alexa voice assistant.
But four years after Alexa was released, customers complained about the device sending recordings to the wrong people, and reports came out about Amazon workers listening in on what people were telling Alexa on their devices.
Even though Alexa reached a point where it was getting a billion interactions a week, the interactions, like asking for the weather, were largely not monetizable.
Alexa and Echo lost around $5 billion in 2018, The New York Times reported. That same year, the company had 10,000 employees working on Alexa and Echo products. By the end of 2019, hiring for that team was frozen, three former employees previously told Insider. By the next year, Bezos stopped engaging with its development.
In 2019, David Limp, Amazon's senior vice president for devices and service, said at an all-hands meeting that Alexa's engagement and security needed to be improved for it to get to the "next level."
In a statement previously shared with Insider this year amid the reported losses, Limp said Amazon is "as committed as ever to Echo and Alexa, and will continue to invest heavily in them."
When it comes to digital voice assistants, Alexa had the third largest number of users behind Google Assistant and Apple's Siri this year.
"Alexa is a colossal failure of imagination," a former Amazon employee told Insider. "It was a wasted opportunity."
Last week, reports of layoffs at Amazon showed they could primarily affect the team working on Alexa.
Limp followed up to reports with an email confirming that some employees on the Devices & Services team would be laid off.
"I am incredibly proud of the team we have built and to see even one valued team member leave is never an outcome any of us want," Limp said.