Shulou(Shulou.com)11/24 Report--

Amazon's star project, Alexa Voice Assistant, is hanging by a thread. When Amazon first launched the Alexa in November 2014, the media regarded it as the "computer of the future".

The tech media CNET likens Alexa to the technology in the science fiction movie Star Trek, while the US computer World calls it "the future of every family". However, for nearly a decade, the voice assistant did not live up to Amazon's expectations.

The biggest source of losses, the hardest hit by layoffs, is within Amazon, where Alexa Voice Assistant, along with Echo smart speakers and Prime Video video services, is a "global digital" business. Internal data show that the business suffered an operating loss of more than $3 billion in the first quarter of this year.

The vast majority of losses in Amazon's global digital business are related to Alexa and related hardware, according to people familiar with the matter. By far, this is by far the biggest source of losses among all Amazon's business units, more than double that of its fledgling brick-and-mortar stores and fresh department stores.

Although Amazon has a big family and has always been willing to spend money on its hardware business, things have changed. According to media reports and internal emails, Amazon is launching the largest layoffs in its history, with Alexa and the entire hardware team being the main targets.

After the layoffs were announced, more than a dozen former and current employees of Amazon's hardware team described a department in crisis to the media. Although Alexa was once one of Amazon's fastest-growing projects, losses continued to grow and now there are big layoffs, suggesting that the voice assistant business and Amazon's entire hardware division are in rapid decline.

Amazon has explored a business model that sells hardware at cost and generates revenue through users' subsequent shopping activities. The latest changes confirm the failure of this business model. As one former employee said: "Alexa suffered a fiasco in terms of imagination and wasted the opportunity."

Amazon did not respond to questions about the financial status of the hardware and voice assistant business, but David Limp, Amazon's senior vice president for devices and services, said in a previous announcement: "We will continue to be committed to Echo smart speakers and Alexa voice assistants and continue to invest heavily in them."

When business model exploration failed to launch Alexa, Amazon saw a new business model. Instead of making money from product sales, as traditional hardware manufacturers do, Amazon wants consumers to place orders through voice assistants and accelerate shopping frequency through Echo smart speakers. As an internal document shows: "We do not intend to make money from the purchase of equipment, but hope to make money in the process of using the device."

The first generation of Echo smart speakers are so popular that they sold more than 5 million units in the first two years of the market, according to Consumer Intelligence Research, a research firm. Amazon officially did not disclose sales figures for Alexa and related hardware.

By 2016, the device even appeared in Amazon's Super Bowl ad. Two years later, the Alexa team almost doubled in size, with more than 10, 000 employees.

The idea for the product comes from Amazon founder Jeff Bezos, so Alexa has become one of Amazon's most popular teams. Bezos himself has been committed to promoting the development of Alexa. Bezos even personally evaluated and commented on the product's email marketing campaign, according to a person involved in the project.

Bezos is also the biggest supporter of the Alexa team. He asked the team to reduce the response time of Alexa, which is much shorter than the industry standard. He also put forward other ideas such as "microwave ovens with integrated Alexa".

Unlike Bezos, Lin Pu, the current senior vice president in charge of Alexa, is not interested in the first generation of Echo smart speakers. Two former employees said Limp rarely used Echo during the testing phase.

Four years after its launch, the product is getting into controversy. Alexa sent voice recordings to the wrong person, and Amazon employees secretly eavesdropped on private conversations. The reports have raised privacy concerns.

Cracks in the product business model began to emerge. Within Amazon, the team raised doubts about the quality of user interaction. At the time, users had a billion voice interactions with Alexa a week, but most conversations were trivial, such as ordering Alexa to play music or checking the weather. This means that Alexa does not bring many opportunities to make money. Alexa broadcasting weather reports does not generate revenue for Amazon, and users can generate very little revenue from listening to music through Alexa.

In 2018, the Alexa team has become an investment black hole. It was reported that the business lost about $5 billion that year. An employee familiar with Amazon's hardware team says losses from the Alexa and hardware businesses will reach about $10 billion this year.

At a staff meeting in 2019, Limp acknowledged the problems. If Alexa wants to "climb another tall building," it must increase user engagement and security, he said. "there are two things we can do: improve user interaction and ensure that users trust their interaction with Alexa," Limp said.

But employees say Alexa is still struggling financially. Although Echo smart speakers are one of the best-selling products on Amazon, most of them are sold at cost.

Three former employees said Amazon had frozen hiring for the Alexa team by the end of 2019. Although some vacant positions will still be filled, the team will no longer expand. The once promising project is losing momentum and employee morale is starting to decline.

The team then tried to use a variety of indicators to measure the true financial significance of Alexa. They even hired a team of experts to track the behavior of Alexa and Echo users on the Amazon platform and observe their Prime membership tendencies and spending frequency. Even so, the financial contribution of the Alexa business was lower than expected.

In 2020, even Bezos' interest in Alexa began to decline. An employee involved in the campaign said Bezos no longer commented on the email campaign and the Alexa team quietly stopped sending relevant messages to executives.

Other commercial opportunities around Alexa have also been lost. Shortly after the launch of the first generation of Echo smart speakers, Amazon launched the Skills app, which allows users to create voice-activated shortcuts to take a taxi or order takeout. Uber, Disney and Domino pizza have all tried this feature, but failed to arouse the interest of users. One employee said the team stopped publishing sales targets in 2020 because the number of users was not ideal.

Attempts to build a developer community around Skills have also failed. An employee familiar with the matter said that the number of registered attendees at Alexa Live developers' conferences has continued to decline in recent years.

Alexa's competitiveness also began to decline after competitors Google and Apple launched voice assistant technology. In the United States, Google Voice Assistant currently has 81.5 million users and Apple Siri has 77.6 million, according to market research firm Insider Intelligence. Alexa only ranks third with 71.6 million users.

Amid declining revenue and market share and layoffs, some employees say the team's recent strategy is also confusing. According to internal documents, the Amazon hardware team plans to develop a new wireless headset and a new augmented reality product, but it remains to be seen whether these new projects will survive this round of cost cuts.

Amazon has always insisted on capturing price-sensitive users with more affordable products, and now Amazon seems more willing to invest in the home robot Astro, which sells for as much as $1000. Employees say this is Bezos's new favorite, and Amazon's product decision to target high-income people has caused controversy and internal discontent.

Amazon CEO Andy Jassy said in a public email that the company would continue to invest in Alexa. The future direction of this product is completely unclear.

Many people accuse Amazon of having no ambitions for device sales. Amazon has no incentive to create the hot products that users really want, according to an employee. "there are no clear instructions for the device business. What do we want to do? the best or the cheapest? when this is not clear, competing factions emerge." The employee said.

Employees say low morale, failed commercialization and a lack of user and developer participation have made them feel that the team has been deadlocked over the past few years.

Recently, Amazon management also kept quiet after the release of reports that Alexa would be the hardest hit area for layoffs. Many employees are also asking how they will be affected.

Limp later e-mailed the entire team to confirm the reports. "I have to announce this painful news," he wrote. As a result of this initiative, talented employees of the equipment and service team will leave. I am proud of our team, and the departure of every employee is not what we want. "

The Alexa team also lost several executives. In August, Gregg Zehr, president of Lab126 (Amazon's ace of consumer electronics research and development, kindle), announced his retirement after 18 years at Amazon. Tom Taylor, senior vice president of Alexa, also announced his retirement on the same day, ending his 22-year career at Amazon.

This confusion has also affected user-oriented technical support. Earlier this year, Amazon found that voice shortcuts that allow users to buy items in shopping carts are not available in the United States and India. Before the team solved the problem, the problem had been delayed for more than 200 days in India and 35 days in the United States.

Although Alexa was overshadowed by the biggest restructuring in Amazon's history, employees say there is a successor to Amazon's new favorite: the health care business.

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