Compilation/Weijin
[Introduction] Recently, Amazon announced the largest layoff in the company's history, involving tens of thousands of employees, and the star project "Alexa Voice Assistant" was not spared. It used to be one of Bezos' "sons", so it can afford to buy smart speakers at cost, and then use hardware to drive users' subsequent purchases. This model failed to work out, and Alexa was running farther and farther on the road of loss: an employee said that the loss of related projects would reach about 10 billion dollars this year. Therefore, Amazon has also started to adjust its product strategy to target high-income people. Not only that, in today's smart speaker market, Google Voice Assistant and Apple Siri are the top and runner up respectively, and Alexa has fallen to the third place. At the time of internal and external troubles, the whole Amazon also lost patience with Alexa.
Amazon star project -- Alexa voice assistant -- is on the verge of death. When Amazon first launched Alexa in November 2014, the media regarded it as "the computer of the future". The technology media CNET compares Alexa to the technology in the sci-fi movie Star Trek, while the US Computer World calls it "the future of every family". However, in the next 10 years, this voice assistant did not meet Amazon's expectations.
01 The biggest source of loss, the hardest hit area for layoffs
Inside Amazon, Alexa Voice Assistant, together with Echo smart speakers and Prime Video video services, belongs to the "global digital" business. According to internal data, in the first quarter of this year, the business suffered an operating loss of more than $3 billion.
People familiar with the matter said that the vast majority of losses in Amazon's global digital business were related to Alexa and related hardware equipment. So far, this is the largest loss source of all Amazon business departments, and even more than twice the loss of the newly started physical stores and fresh department stores.
Although Amazon is a big business and has been willing to burn money for its hardware business, the situation has changed. According to media reports and internal emails, Amazon is initiating the largest layoff in the company's history, and Alexa and the entire hardware equipment team are the main targets of layoffs.
After the news of layoffs was announced, 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 the fastest growing projects of Amazon, the loss continues to expand and now it has gone to major layoffs, indicating that the voice assistant business and the entire hardware department of Amazon are declining rapidly.
Amazon has explored the business model of selling hardware devices at cost price and generating revenue through subsequent shopping activities of users. The latest changes confirm the failure of this business model. As one former employee said, "Alexa failed miserably in imagination and wasted the opportunity."
Amazon did not respond to the question about the financial status of the hardware device and voice assistant business, but David Limp, Amazon's senior vice president in charge of devices and services, said in a previous announcement: "We will continue to be committed to the Echo smart speaker and the Alexa voice assistant, and continue to invest heavily in them."
02 Business model exploration failed
When Alexa was launched, Amazon saw a new business model. Amazon does not intend to make money from product sales like traditional hardware manufacturers, but hopes that consumers can place orders through voice assistant and accelerate shopping frequency through Echo smart speakers. As an internal document shows: "We do not intend to make money by users buying devices, but we hope to make money when users use devices."
According to the data from the research organization "Consumer Intelligence Research", the first generation Echo smart speakers are very popular, with more than 5 million sold two years before their launch. Amazon did not disclose the sales data of Alexa and related hardware.
By 2016, this device even appeared in Amazon's "Super Bowl" advertisement. Two years later, the size of Alexa's team almost doubled, with more than 10000 employees.
This product idea comes from Amazon founder Jeff Bezos, so Alexa has also become one of Amazon's most popular teams. Bezos himself has been committed to promoting the development of Alexa. A person who participated in the project said that Bezos even personally evaluated the e-mail marketing activities of this product and gave opinions.
Bezos is also the biggest supporter of the Alexa team. He asked the team to shorten Alexa's response time, which is far shorter than the industry standard level. He also proposed other ideas such as "the microwave oven integrated with Alexa".
Unlike Bezos, Lin Pu, the senior vice president in charge of Alexa, is not very interested in the first generation of Echo smart speakers. Two former employees said that in the testing phase, Rinpp seldom used Echo.
After four years of launch, this product gradually fell into dispute. Alexa once sent voice records to the wrong person, and Amazon employees secretly eavesdropped on private conversations... These reports triggered concerns about privacy protection.
The cracks in the product business model began to appear. Inside Amazon, the team raised doubts about the quality of user interaction. At that time, users had 1 billion voice interactions with Alexa every week, but most of the conversations were very trivial, such as ordering Alexa to play music or inquiring about the weather. This means that Alexa did not bring too many opportunities to make money. Alexa's playing of the weather forecast does not generate revenue for Amazon, and the revenue that users can bring by listening to music through Alexa is also very small.
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 said, This year, Alexa and the hardware equipment business will bring losses of about $10 billion.
At a staff meeting in 2019, Limp acknowledged the existence of these problems. He said that if Alexa wanted to "go further", It is necessary to improve user participation and security. Limp said, "We can do two things: improve user interaction and ensure that users trust the interaction with Alexa."
However, employees said that Alexa was still struggling financially. Although Echo smart speakers are one of the best-selling products on Amazon's platform, most of them are sold at cost.
Three former employees said that, By the end of 2019, Amazon had frozen the recruitment of Alexa team. Although some vacant positions will still be filled, the team will no longer expand. This once promising project is losing momentum, and the morale of employees is beginning to decline.
Subsequently, the team tried to use various indicators to measure Alexa's true financial significance. They even hired an expert team to track the behavior of Alexa and Echo users on the Amazon platform, and observe their Prime member registration tendency and consumption frequency. Even so, the financial contribution of Alexa's business is still lower than expected.
In 2020, even Bezos' interest in Alexa began to weaken. An employee involved in marketing activities said that Bezos would no longer comment on e-mail marketing activities, and the Alexa team also quietly stopped sending relevant information to executives.
Other commercial opportunities surrounding Alexa also failed. Shortly after the launch of the first generation Echo smart speaker, Amazon released the Skills app, which allows users to create voice activated shortcuts to take a taxi or order takeout. Uber、 Disney and Domino's Pizza have tried this function, but it failed to arouse users' interest. An employee said that in 2020, because the number of users was not ideal, the team stopped publishing sales targets.
Attempts to build a developer community around Skills also failed. An informed employee said that the number of registered participants in the Alexa Live Developer Conference has continued to decline in recent years.
After competitors Google and Apple developed voice assistant technology, Alexa's competitiveness began to decline. According to data from Insider Intelligence, a market research organization, Google Voice Assistant currently has 81.5 million users in the United States, and Apple Siri has 77.6 million users. Alexa has 71.6 million users, ranking only the third.
In the case of declining revenue and market share and layoffs, some employees said that the team's recent strategy was also confusing. According to internal documents, Amazon's hardware team plans to develop a new wireless headset and a new augmented reality product, but whether these new projects can survive this round of cost reduction and efficiency increase is still unknown.
Amazon has always insisted on capturing price sensitive user groups through more affordable products, and now Amazon seems more willing to invest in the home robot Astro, which sells for up to $1000. The employees said that this is Bezos' new favorite, and Amazon's product decision to target high-income people has triggered controversy and internal dissatisfaction.
03 The future is uncertain
Andy Jassy, CEO of Amazon, said in an open 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 ambition for device sales. An employee revealed that Amazon has no incentive to create popular products that users really want. "At present, there is no clear instruction for the equipment business. What do we want to do? Do we want to do the best or the cheapest? When this is not clear, there will be competing factions." The employee said.
Employees said that low morale, failure of commercialization and lack of user and developer participation made them feel that the team had reached an impasse in the past few years.
Recently, Amazon's management also kept silent after the report that Alexa would be the hardest hit area for layoffs was released. Many employees are also asking about their own impact.
Limp later confirmed these reports by sending an email to all members of the team. He wrote: "I have to announce this painful news. As a result of this move, talented employees of the equipment and service team will leave. I am proud of our team. The departure of every employee is not the result we want."
The Alexa team also lost several senior executives. In August this year, Gregg Zehr, president of Lab126 (Amazon's flagship consumer electronics R&D department, represented by Kindle), who is responsible for a variety of personal hardware products, announced his retirement after 18 years of work at Amazon. Alexa Senior Vice President Tom Taylor 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 support users to buy goods in shopping carts are not available in the United States and India. Before the team solved the problem, it had been delayed for more than 200 days in India and 35 days in the United States.
Although Alexa was eclipsed in the largest restructuring in the history of Amazon, employees said that there were successors to Amazon's new favorite position: Healthcare business 。
