In recent years the market of voice assistants had significantly grown as some leading tech companies were striving to developing their voice assistants’ technologies. The market is being led my three technological giants: Google, Amazon and Apple, having respectively 81,5mln, 77,6mln and 71,6mln users[1]. Although those technologies are developing and gaining users, all of those companies are struggling to monetize their assistants. In this post I would like to focus and analyze the case of Amazons’ Alexa.
Probably most of you know what Alexa is, however if you do not, let me quickly explain. Alexa is an intelligent voice assistant which is connected to a cloud-based service with voice commands. According to Wikipedia[2], “the technology is largely based on a Polish speech synthesizer named Ivona, bought by Amazon in 2013”. Customers may use it through Amazons’ Echo device, a hands-free speaker. In order to use the device, you need to “wake it up” simply by saying “Alexa”. Moreover, the device is known for the ability to amuse customers with short stories and having a great sense of humor.
According to Financial Times[3], Amazon is planning some huge layoffs, and Alexa unit is probably an area which will get hit hardest. Alexa was launched in 2014 and through all of those years was being strongly developed, what resulted in creation of one of the best voice assistants in the world. Alexa is able to perform more than 100000 skills globally, with the biggest skillset of 77000 in US[4]. The functionality ranges from voice interaction, making to-do lists, playing music and providing weather and news to controlling several smart devices, however the list is much longer.
As we may look at the data from previous years, Alexa had the biggest impact and a remarkable advantage on the voice assistant industry according to Voicebot[5] in 2019 and 2020. Moreover, in 2021 the shipments of Alexa reached 21.9mln of devices[6] and Amazon had a 44% market share (according to the same research, in 2020 the shipments reached 45mln devices and a 64% market share, however due to pandemic it is being treated as an outlier).
All of those data might have looked optimistic, however in 2021 sales dropped to 4mln which means 78.9% decrease year to year[7] and currently Amazon is planning layoffs. The biggest problem is that, through all these years they were struggling to monetize it, but unfortunately failed as the devices are being sold at cost[8]. The idea was to sell people a device which they can use not only to check weather and news but also to purchase products from Amazon. It seems to be a good idea, as the purchase was supposed to be done by voice, albeit people are wary of buying things without seeing them. The next idea was to give a possibility of ordering food or drinks from restaurants, unfortunately it also failed. In 2021 only 17.5% of consumers used voice shipping, which definitely isn’t enough to satisfy the creators of voice assistants.
As a voice assistant, Alexa has to listen all of the time, and that is what concerns over 33% of consumers, as Voicebot mentions. “Amazon’s Alexa collects more of your data than any other smart assistant”[9], to be precise 37 out of 48 possible parameters, and e.g., Google collects 28. That information also isn’t encouraging for consumers, specifically for those who are vulnerable about their privacy.
Other companies are also struggling with creating a profitable business model for their devices and I think that the nearest future will determine the existence of voice assistants. Let me know your thoughts about those devices, and whether you have any ideas to monetize them!
[1] https://dailyweb.pl/amazon-alexa-miala-uczynic-windows-inteligentniejszym-nie-wyszlo/
[2] https://en.wikipedia.org/wiki/Amazon_Alexa
[3] https://www.ft.com/content/19cb5d06-f60e-41a3-aab6-0fcc060e2604
[4] https://policyadvice.net/insurance/insights/amazon-alexa-statistics/
[5] https://voicebot.ai/2020/05/11/voice-industry-professionals-say-amazon-alexa-is-having-the-biggest-impact-followed-by-google-with-everyone-else-far-behind-new-report/
[6] https://www.pcmag.com/news/amazon-powered-smart-speakers-see-big-2021-shipment-decline
[7] https://www.pcmag.com/news/amazon-powered-smart-speakers-see-big-2021-shipment-decline
[8] https://arstechnica.com/gadgets/2022/11/amazon-alexa-is-a-colossal-failure-on-pace-to-lose-10-billion-this-year/
[9] https://www.pcmag.com/news/amazons-alexa-collects-more-of-your-data-than-any-other-smart-assistant
It’s interesting to see another solution that did not get market traction despite high expectations. However, I believe it’s not the end of voice assistants – AI and context understanding will immensely enhance their capabilities. The form will probably change from a device to more widgets or applications.