Amazon’s Alexa Business Under Scrutiny Following Profitability Review

Reports have surfaced from within Amazon that the Alexa business unit is under scrutiny following an in-depth cost-cutting review headed by CEO Andy Jassy.

We recently covered how the Amazon Scout program was being shelved which appears to be a casualty of these cost-cutting measures. This also follows reports that Amazon has frozen all corporate hiring as it is now doing some restructuring internally trying to find roles for those staff members whose projects have been scrapped.

Would Amazon Consider Shrinking Alexa?

One of the biggest wins for Amazon over recent years has been the success of the Alexa business unit. It is being found in more and more devices and gaining greater abilities on a daily basis.

In a recent review, however, it appears that the Alexa business unit is not immune from scrutiny. According to the Wall Street Journal, the business has more than 10,000 employees and is a primary recipient of investment capital. The Wall Street Journal also claims that it has seen internal documents showing that in some recent years Amazon’s devices unit, which includes Alexa, had an operating loss of more than $5 billion a year.

The decision of cost-cutting asks the question of whether they should consider continuing to add new capabilities to the smart home device. Adding capabilities would of course require further investment, and many customers only use Alexa for a few functions. This can be difficult to justify on a business unit that is allegedly losing $5 billion+ a year.

Amazon has been quick to note that the Amazon Alexa devices and service will not be going anywhere and that Alexa remains a large part of Amazon’s future plans.

“Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review,” an Amazon spokesman said in a statement.

“As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimize costs.”

“Amazon is as optimistic about Alexa’s future today as we’ve ever been, and it remains an important business and area of investment for Amazon.”

This news following the disappointing Q3 results for Amazon further highlights the point that even the largest businesses are not immune to the current downturn in the economy and tough decisions are having to be made across the board.

Dave Furness

Dave is a Co-Founder of eSeller365. For over 10 years he has been involved with eCommerce with a particular interest in the marketplaces and the huge opportunities available for sellers when utilizing a multi-channel strategy. After a year of being the UK’s youngest eCommerce consultant, he built an education platform called UnderstandingE that showed the world how to utilize Magento as the “Third Generation of Multi-Channel software”.

Dave has also created a YouTube channel dedicated to entrepreneurship and eCommerce as well as a podcast dedicated to mental health awareness. When Dave isn’t working his main interests include learning and playing Chess, researching the Crypto and NFT space, and trying to find the nearest beach.