How Alexa Became Amazon’s Problem

Amazon’s voice assistant Alexa has officially been relegated to a side project. The group wanted to use it to change everyday life. You just couldn’t make it taste good to the customers

“By the way…”: With this unobtrusive word, Amazon’s voice assistant Alexa offers suggestions for what else you can do with it after executing a command. And this is not only very annoying to customers, but also reveals a very fundamental problem with the former beacon of hope: it simply could not live up to its expectations.

This is clear from the detailed section of Insiders. After Amazon announced last week that it would be downsizing its hardware division, which includes the Alexa team, the magazine spoke to a number of current and former employees of the division. And their opinion seems unanimous: Amazon’s dream of a voice-controlled computing revolution has exploded.

“Colossal Failure”

“Alexa is a colossal failure of imagination,” one employee said bluntly. “It’s a complete missed opportunity.” At first, the idea was great. Just like in the Star Trek series, people should soon be able to control computers with just their voice, just by saying all the wishes in the room. Amazon founder Jeff Bezos was particularly enthusiastic about the idea. We also have him to thank for the fact that the assistant can be started by “computer” without the code words “Alexa” or “Echo”, as Captain Picard always did in the movie “Next Generation”.

The business model also sounded enticing: because Amazon sold its speakers at cost, they were very affordable to customers and the barrier was low. Profits should come from additional Amazon purchases customers make through the Assistant. “We want to make money when our users use their devices, not when they buy them,” the insider said in an internal document. But that never happened. Despite a wildly successful start—Amazon sold five million Echoes in its first year alone—a slew of other Alexa-enabled devices like Fire TV products or the microwave oven, and numerous attempts at monetization, the business has increasingly slipped into suffering

Nobody wants to shop with Alexa

The main problem was the users themselves. Although the number of commands continues to increase, most users stick to the few that they actually use on a daily basis. They ask what time it is, set the daisy timer, and ask for songs to be played. Of these three examples, only music makes money—and only if the user uses Amazon’s music service.

The primary source of revenue that was originally hoped for, shopping through Alexa, and thus through Amazon, never panned out the way the group had hoped. Alexa CEO David Limp in 2018 already admitted in an interview with Stern that it’s simply impossible to shop very well with language. While you can clearly define what you want to hear with music, it’s much more complicated with Amazon’s other offerings. “You have to match size, cut, color, brand, and a lot of other metadata to find the product you want,” he explained. And then customers don’t even see the result. You can find the full interview here.

Apple’s example does not bring success

Amazon’s other attempts to monetize Alexa have also failed. Based on the Apple Appstore model, the company introduced an interface called “skills” with which developers and companies can offer their applications to the assistant. The idea: Stores that buy using these skills would earn a commission on Amazon. But while many developers initially offered the skill, user interest remained low. The skills got dusty. Attendance at the purpose-built Alexa fair is falling, says…

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