When It Comes To Loss-Making Alexa, Why Amazon Should Think of iPhone
When Amazon.com Inc. first introduced its Echo smart speaker in 2016, it was mocked in some parts of the tech press as a gimmick. Why would anyone want a speaker to tell them the day of the week, or ask how many teaspoons were in a tablespoon? It turns out lots of people do. An estimated 65 million Echo units were sold globally last year, and sales are project to continue increasing. When it comes to scale and popularity, the speaker's digital assistant Alexa has been a tremendous success. But the snark at the start of Alexa's life was partly right. Financially it's been a flop. Amazon sells its device at cost and with more than 10,000 employees working on the project, it is bleeding cash.
Amazon's devices and services unit, which oversees Alexa, had an annual operating loss of $5 billion in recent years, according to a report earlier this month in the Wall Street Journal. A more recent report from Business Insider, which spoke to more than a dozen former and current employees, paints a worsening picture: the division is on course to lose about $10 billion this year alone, according to an employee familiar with the team cited by Business Insider. It is also a prime focus for some of Amazon's biggest-ever layoffs.
Amazon is experiencing a perennial dilemma: Great technology by itself doesn't make money, business models do. Some of the world's most popular tech platforms still struggle with that concept. WhatsApp, which Meta Platforms Inc. bought for more than $19 billion and is used by more than 2 billion people, still brings in little revenue. Twitter Inc., which has about 300 million active users, has struggled to maintain profitability and branch out from a business model other than advertising. Today's mass,
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