Amazon put 500 million Alexa devices in homes. The payback never came.
Amazon sold Echo devices at a loss, expecting people to shop by voice. By mid-2024 there were reportedly more than 500 million Alexa devices. The voice sales were never validated.
Transcript
By mid-2024, there were reportedly more than 500 million Alexa devices in the world. Many sold at a loss.
It came from a Bezos letter about Kindle: we want to make money when people use our devices. With Echo, launched in 2014, the use was to be voice shopping.
By 2017, the Echo was $99.99 and the Echo Dot $49.99. Even with a cheaper chip and a plastic body, the base Echo sold at a loss.
The payback, voice shopping, was an assumption nobody validated before the money went out. In November 2022, Amazon cut about 10,000 jobs, with devices among the hardest hit.
A loss leader is a loan to your future customer. Before you make it, test the behavior meant to pay it back.
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Every figure in the video comes from this Decision Record, each with its sources.
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