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Amazon is tightening its belt and Alexa could feel the squeeze: report

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It’s tough times for tech land and, it seems, no sector or business is immune. Even things we use almost every day, like Amazon’s voice assistant, Alexa, could face cutbacks, at least according to reports.

In the wake of major tech companies tightening their belts, slowing down hiring, and laying off thousands of workers (opens in new tab), Amazon is, according to a new Wall St. Journal report (opens in new tab), taking a hard look across its nearly $200-billion-a-year-revenue-generating business for unprofitable sectors and places they can cut back.

One area, according to The Journal, is Alexa. The eight-year-old digital assistant, which launched with Amazon’s first Echo device, has become an AI staple around the world with nearly 50 million Echos sold (opens in new tab) in the US, alone. It was Alexa, and not Apple’s own digital assistant Siri, which launched in 2022, that popularized personal digital assistants. Alexa also launched the concept, with Echo, of a smart speaker.

The problem it seems is that Amazon is spending a lot of money on Alexa development. The Wall St. Journal claims Amazon loses $5 billion a year, for a platform that is only used for a handful of activities. 

Recent Alexa stats (opens in new tab) note that most people use Alexa to set timers, play music, do some shopping, and ask basic questions. Some use it for controlling smart devices, but it’s unlikely that the majority of users are diving into the tens of thousands of Alexa Skills written for the open platform.

Amazon is currently working on developing more open-ended conversation skills (opens in new tab) for Alexa, so it can seem more like a person (it’s also opened up the skill set to third-party developers).

What the report indicates, though, is Amazon is trying to shift teams to more profitable parts of the Amazon business. It’s not clear if Alexa is among those areas suffering a resource drain. In fact, Amazon told the Wall Street Journal that while it is “considering opportunities to optimize costs,” it’s “as optimistic about Alexa’s future today as we’ve ever been, and it remains an important business and area of investment for Amazon.”

In other words, no direct indication from Amazon that its investment in Alexa is any less than robust. 

Even so, if consumers don’t start to expand how they use Alexa – and Amazon does understand how you use it across many of the Best smart speakers – it could eventually look to pull back on the investment at least enough to give consumers time to catch up with AI technology while we all ride out these challenging economic times.