Anyone with an Amazon Alexa device has likely noticed that the smart speaker has tried to upsell them while asking about the weather in the last few months. This is because Amazon understands there is fading interest in its money-losing Alexa voice-controlled smart speaker division.
According to internal data obtained by Bloomberg, 15% to 25% of new Alexa users during 2018 through 2021 completely abandoned the device in the second week of ownership.
Amazon concluded that the market for smart speakers had “passed its growth phase” last year and would only grow 1.2% annually moving forward.
The company lost $5 on average per Alexa device sold, and by 2028 expects to halve that number. Generating revenue through the Alexa devices has been challenging, hence why Alexa now has features that tell you what to wear when asking about the weather and even suggest buying those clothes on Amazon.
These statistics don’t paint an excellent outlook for Amazon’s money-losing Alexa division that employs more than 10,000 people with fixed costs of around $4.2 billion in 2021. Even though Amazon has focused on new ways to regain user retention, maybe people are just tired of Alexa smart devices spying on them.
There have been countless complaints, 75,000 and counting, of Amazon users fed up with the company’s surveillance capitalism tactics to harvest their data with the core purpose of profit-making. This has spawned into at least three class-action suits alleging that Amazon devices recorded people without permission.
The always-on microphone has sparked controversy with privacy advocates, and their calls to drop the devices have grown louder. Perhaps people are figuring out that having a corporation monitoring their conversations is too intrusive and why user retention is sinking.