Is the era of smart speakers over?

“Alexa, why doesn’t anyone want to talk to you?” (Image sources: Mantav Jivva and Anthony Brown via Adobe Stock).

Groovy function: Actors Samuel L. Jackson, Melissa McCarthy and basketball player Shaquille O’Neal can be booked in the USA as additional functions for Amazon’s language assistant Alexa. The voices, not the people behind them. That’s enough of that.

Amazon recently scrapped celebrity votes for Alexa. So it’s almost a certainty: This perhaps coolest additional function in the history of language assistants will never find its way to us in Germany (Golem and The Verge have reported).

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But that’s only in passing here.

Before we get to the heart of the matter: a side glance at Google. Because no sooner have Jackson, McCarthy and O’Neal said goodbye than Google ends a collaboration on its language assistant: namely the one with the app AnyList. You could previously create shopping lists via the application. And that’s not all: the shopping list app Bring! is passed by Google (Smartphone Assistant has reported on AnyList).

With both celebrity voices and shopping list apps, Amazon and Google owe their customers a reason. In other words: There is no official reason why the cooperation was discontinued.

Celebrity voices and list apps both represent a downturn that the formerly acclaimed voice assistants are now having to endure. There is no better illustration of the swan song for voice assistants than that of Amazon’s voice assistant Alexa. But first we write the year 2019.

“I’m a star, I’ll talk your kids to sleep!”

Since 2019 we have been writing the time of the coolest actor in film history, who sends your children to bed or who curses the weather forecast. Because since 2019, Samuel L. Jackson’s (Pulp Fiction, Snakes on a Train) book a charismatic voice for the language assistant Alexa.

As stated at the beginning: the fun is over now. Because: Amazon hasn’t only been in crisis with Alexa since Samuel L..

That Amazon is burying Alexa – to put it graphically – shovel after shovel has long been indicated in a report by Ars Technica (via Business Insider) last November (The Verge also reported on The New York Times).

Because at that time, a wave of layoffs broke out at the technology titan Amazon.

The reason was: the voice assistant Amazon Alexa fell short of commercial expectations. From the rapid decline of the voice assistant Amazon Alexa was the talk at the time.

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In the slipstream of this, the biggest wave of layoffs in Amazon’s history broke out: 10,000 layoffs are said to have been caused by the failure around Alexa. First. The background to this: Since its market launch about 10 years ago, the language assistant Alexa has failed to represent a profitable source of income for Amazon. So much for the news situation in November 2022.

Andy Jessy

On July 5, 2021, Andy Jassy was promoted to be the new CEO of Amazon. (Image source: JD Lasica via Wikimedia Commons)

Jeff Bezos

Jeff Bezos founded Amazon in 1994. (Image source: Steve Jurvetson via Wikimedia Commons)

And then?

Then Amazon CEO Andy Jassy jumped in to comment. Jassy bluntly addressed the mass layoffs at Amazon — and Alexa’s fickle future. Jassy said they want to pursue Alexa as a project. But he also mentioned the rock-hard condition that is tied to this continuation. The stick had a name: The Alexa team would be heavily vaporized. Consequently, 10,000 employees would be dismissed.

That’s how it happened. Just one punch harder.

It was already clear in January 2023: the number of layoffs had increased – by 8,000 employees. A total of 18,000 people have been terminated as a result of the Alexa failure (The Verge reported).

As I said, that was in January of this year. As early as March 2023, the next wave of layoffs spilled over to Amazon’s employees – this time there were 9,000 jobs that were cut for reasons of economy. The second wave primarily affected the cloud department Amazon Web Services, the streaming service Twitch and the advertising department (Handelsblatt reported).

A five-digit and a nearly five-digit mass layoff within a few months. Why did Amazon have to cut jobs?

How to make money with apps?

Flashback: According to Business Insider, the Alexa division lost more than $3 billion in the first quarter of 2022 alone. It also said the lack of Alexa sales was responsible for most of the fiscal loss.

The pricing policy around Alexa is noteworthy. Actually, Amazon’s Alexa Echo product range is one of Amazon’s best-selling products. At the same time, Alexa Echo is sold at cost price. In other words: the production costs of an Alexa Echo correspond roughly to the sales that Amazon achieves with the sale.

Well, so the profit margin of the product is very small. But how did Amazon intend to make a profit with the voice assistant?

An internal document from Amazon provides information about this, which states:

“We want to make money when people use our devices, not when they buy them.”

Eureka! Of course, Amazon is clever and has saddled itself with a business model that relies on the monetization of apps – not on the sale of the language assistant itself.

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Unfortunately, monetization went differently than Andy Jassy and Amazon wanted. On the one hand, in the fourth year of its existence, Alexa recorded one billion interactions per week – which sounds reasonable at first. As I said: on the one hand. On the other hand, Amazon had not counted on the (un)art customer sub-action.

Because: The majority of this user interaction was due to non-monetizable commands such as: Alexa, play my favorite song! or Alexa, is it raining today? In other words: no sales can be generated from Spotify music requests or weather information. Regardless of whether the user is sitting at home or using Alexa in the car.

Customers also rarely bought products via Alexa. The reason for this? It may have something to do with how customers make a purchase decision. If the product you want isn’t there either in pictures or in a customer review, many potential buyers are deterred – and don’t even buy it.

So Amazon’s effort to add monetizable voice commands to Alexa was a failure. The fact that Amazon is now also sawing off celebrity votes speaks for itself: Amazon continues to limit damage and mothball loss-making cooperations.

Amazon was once the beacon of hope for ex-Amazon boss Jeff Bezos.

Amazon Alexa: an anti-success story?

In 2018, Alexa was former Amazon CEO Jeff Bezos’ favorite child. A crisis meeting was convened in 2019 to get the inadequate sales figures under control. The meeting resulted in a hiring freeze for the Alexa project. A year later, in 2020, Bezos himself lost his previously increased interest in Alexa.

Patrick You can

For Patrick, language assistants have always been cloaked in the dystopian image of a listening device. Maybe Patrick has read George Orwell or Ray Bradbury one too many times. So be it.

Only very few use a language assistant in their personal environment. And that despite the fact that his peer group consists of people with an affinity for technology. The user base within a few people who are enthusiastic about technology toys is certainly even lower, Patrick suspects.

The future for Alexa

And what comes now? According to a Business Insider report, Amazon wants to revive Alexa with an AI voice bot. The artificial intelligence is supposed to conjure up bedtime stories for children – and Amazon is imagining lucrative cooperations with companies such as Disney or Lego.

Another use case would be if your own memory fails again. Then you could ask Alexa: Hey Alexa, what’s the name of the TV series set during a zombie apocalypse – and based on a comic book Alexa then told you that you were looking for the series The Walking Dead. Whether Alexa will successfully ditch in the AI ​​lifeboat remains speculative for the time being.

Do you think the former hype about language assistants has recently fizzled out? Do you chat in and with a language assistant yourself – and are you satisfied with the experience? Write us about it in the comments!

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