Alexa had "no profit timeline," cost Amazon $25B in 4 years
Amazon's Alexa gadgets unit faced $25 billion losses from 2017-2021 despite selling 500,000 devices. Innovation drove sales, but revenue from services like shopping was low. Layoffs occurred, emphasizing service-oriented profitability.
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The Wall Street Journal reported that Amazon's Alexa-powered gadgets business unit incurred losses of $25 billion between 2017 and 2021. Despite selling over 500,000 Alexa devices, including Echo speakers and smart home security cameras, Alexa struggled to generate profits. The business unit prioritized innovation over immediate financial success, selling devices at low prices or even at a loss to drive adoption. However, revenue from services like shopping through Alexa remained insignificant. Challenges in selling additional services and limitations in ad sales further hindered revenue generation. Despite significant losses, Amazon continued to invest in product development, including projects like the Astro consumer robot and Amazon Halo health trackers. The Devices division faced layoffs of at least 19,000 workers since 2022. Amazon emphasized focusing on the value created when customers use their services, indicating a shift towards service-oriented profitability within the Devices & Services organization.
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