Echo speakers failed to become a bonanza for Amazon. As the company's CEO Andy Jassy admits, the technology only brought colossal losses to the retailer.
When Amazon released its Echo smart speakers with Alexa voice assistant in 2014, the company repeated a classic Gillette mistake: selling razors for pennies in hopes of making a ton of money on replacement blades. Echo and other devices are also sold at or below cost.
Ten years later, this project became profitable. Despite hundreds of millions of Alexa-enabled device owners, the idea that people would spend significant sums buying items on Amazon using the cheap voice assistant hasn't worked out.
Essentially, customers use Echo mostly for free apps like alarm clocks and weather checks.
As a result, Amazon lost a huge amount of money on the division that created the Echo and other “smart devices” such as the Kindle, Fire TV Stick and so on. From 2017 to 2021 alone, Amazon's losses from this business exceeded $25 billion.
An Amazon spokesman said the smart devices division is a profitable business and has prospects for further growth.
Now the company is trying to somehow plug the hole through which money flows every day. As part of its plan to cut losses, Amazon is launching a paid version of Alexa this month. However, according to some engineers working on the project, this step will not bring results.
