Nov 26, 2022
$10B Annual Loss
Recent news talks about how Amazon is losing $10B a year on Alexa. This isn’t a suprise. Making voice-first products weren’t really a way to make money. We learned this the hard way back in 2015.
Shortly after the Echo’s launch, news reports estimate that households with Echos spent 15% more on Amazon. However, maybe that was correlation vs. causation.
It’s surprising that Amazon isn’t realizing the downstream benefits of being first in this space. What is the information that could be used to better match products with Echo users? What about the data from being in over a third of US households? How can a device like the Echo pair with Amazon’s new foray into healthcare?
Yes, it’s hard to make any money on consumer hardware unless the margins are high, which is usually reserved for extreme luxury-end devices and is not mainstream. However, when you own the infrastructure and all other corollary services, there should be a way for Alexa to be part of an amazing customer experience.
Maybe that required more risk taking from Amazon? If you’re already spending so much, it’s worth it.
