Amazon’s Alexa team set to lose $10 billion this year, was the main driving force behind mass layoff

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Amazon is currently in the middle of one of the biggest mass layoffs in its history. The e-commerce giant plans to terminate about 10,000 people by 2023, and also plans to refocus finances and efforts away from the hardware division. The Alexa team at Amazon, responsible for not only the voice assistant, but the devices as well, is one of the hardest hit divisions, with more than half of all employees in the vertical, either being reassigned or terminated.

Amazon’s Alexa team set to lose $10 billion this year, was the main driving force behind mass layoff

Amazon has not been able to monetise the “smart assistance” that Alexa provides. Because they sell the Echo devices at cost, they haven’t been able to make money on them as well. Image Credit: Pexels

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Amazon will be losing about $10 billion just this year because of Alexa. Alexa, which was a pet project of Jeff Bezos, was one of the best voice assistant when it was launched almost a decade ago. However, Amazon, like Google, hasn’t been able to monetise their voice assistant services in any meaningful way.

Moreover, the smart assistant takes up a lot of space and compute power in Amazon’s server. With each passing year, it was becoming difficult for Amazon to justify the space that that programme takes up on its servers and the amount of computing power it occupies. 

This happened, despite the fact that Amazon was able to place Alexa in a number of devices and hardware that were not the Echo speakers. Also, Alexa’s Echo line is among the “best-selling items on Amazon.” However, most of the devices are sold at cost.” The plan with Alexa was for Amazon to want to make money when people use the devices, not when they buy bought them. This has colossally backfired on the e-commerce giant.

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According to a report by Business Insider, the Alexa division, along with Prime Video lost about $3 billion in just the first quarter of 2022, with a vast majority of the losses coming from the Alexa division. The hardware team, as we said is said to lose about $10 billion this year. 

The Alexa division has been trying to turn around monetisation of the assistance services for years now. An all-hands crisis meeting took place in 2019 to try to turn the monetization problem around, but that was futile. 

As a result, Amazon stopped hiring people for the Alexa division by late 2019. Bezos too started to lose interest in his pet project around 2020. Bezos’ successor as Amazon’s CEO, Andy Jassy is also not interested in protecting Alexa.

Jassy has claimed that the company still has “conviction in pursuing” Alexa, but that’s after making huge cuts to the Alexa team. However, the Alexa division believes that there is no clear directive for devices in the future, and that since the hardware isn’t profitable, there’s no clear incentive to stay on that direction.

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