We have known for exactly a week that Amazon will cut about 10,000 jobs in the United States and that the job losses will mainly focus on those parts of the company that have had little, no or even a negative impact on the otherwise strong company sales.
The New York Times also learned that Amazon’s appliances division is likely to be most affected by the job cuts. The business with the Kindle e-readers, the streaming solutions of the Fire TV family and the numerous Alexa speakers of the Echo portfolio has reached gigantic proportions, but it is not really profitable. In particular, the speakers with the voice assistant function, some of which are sold at a loss, apparently also do not generate long-term sales.
There are no long-term sales
Unlike the Fire TV and Kindle, which generate consistent revenue from movies, Amazon channels, and e-books, Alexa customers set timers and ask about the weather, but don’t buy premium skills to play language games with their talking cylinders .
The size of the losses, however, was previously unknown. Business Insider now comes with concrete figures. Not only does he claim to have found out that the so-called “Alexa Division” suffered a whopping $3 billion in losses in the first quarter of 2022 alone, but also mentions the dramatic forecast: the devices division is currently on the best track for an annual deficit of $10 billion.
According to several Amazon employees who spoke to Business Insider, the Alexa business is not just a “colossal failure,” but more importantly, a “missed opportunity.”
Alexa needs to be followed up
Amazon’s current CEO Andy Jassy doesn’t want to give up the Alexa division altogether. In a statement, founder Jeff Bezos’ successor explains:
[…] Amazon has a history of weathering uncertainties and tough economies, and will continue to do so. There are great opportunities ahead of us both in our more established businesses such as Stores, Advertising and AWS as well as our newer initiatives that we have been working on for several years and are passionate about (e.g. Prime Video, Alexa, Kuiper, Zoox and care). The key will be to do what Amazon does best – obsess over customers and develop relentlessly for them – and when we do that, we should all be very optimistic about Amazon’s future. I know it’s me