Amazon Alexa allegedly burns millions of dollars
Amazon is making losses in the double-digit millions with Alexa, reports the Wall Street Journal. A paid subscription for a new version should soon change this.
Alexa will soon be smarter - for an extra charge.
(Image: Shutterstock.com; Phil Lewis)
Amazon plans to offer its new Alexa subscription this month, which will unlock a smarter version of the assistant. This is reported by the Wall Street Journal. The timetable described in the report is likely to relate to the USA for the time being - it remains to be seen if and when the Alexa subscription will come to Germany.
Between 2017 and 2021, Amazon incurred losses of 25 million US dollars with Alexa, writes the Wall Street Journal in its report, which is based on conversations with former employees. One reason why Amazon tolerated the losses for so long is said to have been the internal business metric "downstream impact" established by former CEO Jeff Bezos. In other words, Amazon sold its Alexa devices without making a direct profit. Several hundred million are said to be in households worldwide. The hope was that buyers would use their Echo speakers to make purchases on Amazon and thus flush profits into the coffers elsewhere.
According to the Wall Street Journal, the Alexa team was able to take credit for a portion of Amazon's shopping sales. However, there was apparently no evidence that this share was actually attributable to the Echo speakers.
In fact, Alexa had hardly affected shopping sales, an ex-employee told the Wall Street Journal. Instead, users are said to have used their Echo to set timers and check the weather. "We were worried that we had hired 10,000 people and built a smart alarm clock," another former Amazon employee told the WSJ.
Remarkable Alexa
Under the new CEO Andy Jassy, who was installed in 2021, a change in strategy finally took place: Jassy wants to make Alexa measurably profitable, reports the Wall Street Journal. This initiative gave rise to the plan to offer a subscription for an improved version of Alexa. This "Remarkable Alexa" is to be smarter than the previous product, but will cost a monthly fee.
Reuters had already reported on such plans. According to the report, Amazon is considering offering the assistant, probably called "Remarkable Alexa", for a monthly fee of 5 to 10 US dollars. The improved Alexa is planned as an optional add-on. This means that the existing Alexa functions will continue to be available free of charge - only the new features could disappear behind a paywall.
Employees who spoke to Reuters and the Wall Street Journal are skeptical about these plans. The development of smart Alexa is hardly progressing. "The technology is not there, but there is a deadline," a former employee told the WSJ.
(dahe)
