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Hey Alexa, How Did You Manage To Drop $14.7 Billion This Year?

You have to give it to Amazon they like doing things big, including delivering one of the biggest CE category failures of all time.

New information reveals, that their ‘Worldwide Digital Unit’ that manufactures Echo speakers Alexa Voice and delivers Prime Video lost A$4.4 billion in the first US quarter of 2022, and if that is not enough the division that was supposed to power our homes is set to drop $14.7 billion for the year.

New information obtained by the Insiders in the USA reveal that Amazon has been flogging Echo speakers at a loss for a very long time with new management now moving to kill the losses with layoffs.

According to internal data, reported by Insider, the massive loss, was by far the largest among all of Amazon’s business units and slightly double the losses from its still physical stores and grocery business.

Desperate to generate information on consumers former Amazon boss Geoff Bezos developed the plan to sell the Echo speakers that compete head on with Google speakers that have the lion’s share of the Australian market at cost. Now that strategy has gone pear shaped.

The latest teardowns of Echo speakers that at one stage were labelled the best in the market suggests the company has moved to cheap components to try and bend the cost curve and reduce their losses.

One notion being kicked around is to only sell online and at select retailers who buy stock with all costs associated with the product passed on.

More than 10,000 jobs are set to go at Amazon with this division wearing the brunt of the cuts.

Another problem is that consumers are refusing to have an always-on/always-listening Alexa device in their homes due to privacy concerns.

This has dogged the product for several years as consumers become concerned as to who is watching and who is listening in on their private lives.

Alexa was launched originally back in 2014 and in the first two years, the company sold 5 million units hoping that consumers would use it order products from the Amazon web site.

At the time it was tipped as one of the hot new products.

Now the product is in deep trouble with Amazon now in a position where they cannot kill off the product because it would give the voice activation market over to Google and Apple.

Leaked documents reveal that very few customers, only 2% used the devices for shopping.

The data also revealed that 90% of those who tried to order with a voice command never tried it again.

As many as one-in-four purchasers stopped using the device within a week after purchasing it.

Today Alexa is now in third place in the voice control market behind both Google Assistant and Apple Siri.

According to the latest data the current losses are by far the largest among all of Amazon’s business units.

In another sign of change in this division executives such as Lab126 president Greg Zehr, whom Insider says was responsible for many of Amazon’s personal devices, recently retired.

Also gone is Tom Taylor, the senior vice president of Alexa, who announced his retirement on the very same day as Zehr.

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