As Alexa turns 10, Amazon looks to generative AI | TechCrunch

🌈 Abstract

The article discusses Amazon's financial losses on its Echo smart speakers and the challenges faced by Alexa, Amazon's virtual assistant, in meeting customer expectations and competing with other AI assistants like Google Assistant and Siri.

🙋 Q&A

[01] Amazon's Losses on Echo Devices

1. What are the key financial details about Amazon's losses on Echo devices?

• According to the article, Amazon's devices division lost a staggering $25 billion in the five-year period between 2017 and 2021, and the Alexa division reportedly lost $10 billion in 2022 alone.
• The article states that these eleven-digit annual losses, coupled with a rough macroeconomic outlook, have become an untenable situation for the company.

2. Why has Amazon been willing to sell Echo devices at a loss?

• The article explains that selling hardware at a loss can be an effective strategy, similar to printers and razors, where the company makes up for the loss with sales of consumables (ink cartridges and blades).
• Amazon's strategy with Echo devices has been to use them as a "loss leader" to get their virtual assistant Alexa into as many homes as possible, with the goal of monetizing the platform in other ways.

3. How successful has Amazon been in getting Alexa into homes?

• The article states that according to Amazon founder Jeff Bezos, Alexa is now in 100 million homes, across 400 million devices.

[02] Challenges Facing Alexa and Other AI Assistants

1. What are the main limitations of Alexa and other AI assistants?

• The article notes that a majority of Alexa queries involve only three tasks: playing music, controlling lights, and setting timers.
• A former Amazon senior employee is quoted as saying, "We worried we've hired 10,000 people and we've built a smart timer," highlighting the limited functionality of Alexa compared to customer expectations.

2. How are Amazon, Google, and Apple trying to address the challenges with their AI assistants?

• The article mentions that both Google and Apple have recently made efforts to breathe new life into their AI assistants, Google Assistant and Siri, with plans to boost their capabilities.
• For Alexa, Amazon is looking to generative AI as a potential solution to improve the assistant's conversational skills and make it more useful to customers.

3. What is the overall outlook for the future of Alexa and other AI assistants?

• The article suggests that the next few months will be crucial in determining whether Alexa and other AI assistants can regain customer interest and justify the significant investments made by their respective companies.