Amazon’s Alexa: a great idea, but terrible business
The announcement of massive job cuts at Amazon, and the likelihood that its home assistant, Amazon Echo — better known as Alexa — is a financial black hole and a major problem for the company, is prompting speculation about what has gone wrong in a segment in which the company had achieved a truly remarkable market share.
How could the company that promotes scientific management make such a significant mistake and bet the farm on a line of business that is set to cost it some $10 billion this year? What did Jeff Bezos expect from Alexa, what did the company do wrong and why?
The idea behind Alexa is the same as the Kindle: it’s not about making money from the sale of the device, but instead from when people use them. However, the miscalculation seems so obvious that it’s hard to wonder how nobody realized it before: while the Kindle makes absolutely no sense if you don’t buy e-books on Amazon (the new models don’t read books downloaded from peer-to-peer sites), but you can use Alexa for any number of things other than buying stuff on Amazon.
In practice, the Echo is very useful: despite its low cost, it works as a very good speaker, with a surprising quality and richness of bass for its size. In addition, it connects with anything from lights to irrigation systems, slow cookers, heating thermostats…
