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Intrigued by an Ars Technica post about Amazon’s Alexa that suggested all was not well in the tech company’s division that looks after its smart home devices, I went rooting in a drawer where the Echo Dot I bought years ago had been gathering dust. Having found it, and set it up to join the upgraded wifi network that hadn’t existed when I first got it, I asked it a question: “Alexa, why are you such a loss-maker?” To which she calmly replied: “This might answer your question: mustard gas, also known as Lost, is manufactured by the United States.” At which point, I solemnly thanked her, pulled the power cable and returned her to the drawer, where she will continue to gather dust until I can think of an ecologically responsible way of recycling her.
Initially, it looked like a shrewd beachhead for the invasion of our homes. Alexa became a kind of hub for other IoT (internet of things) gizmos – lights, thermostats, heaters, doorbells and so on. Clearly, other tech giants also thought it was significant – Apple, Google and Facebook raced to get their home hubs over our thresholds. And people seemed to like using Alexa: children loved conning her into saying stupid things, while their elders used her to set timers for cooking, compiling shopping lists, playing music, requesting definitions of words or information from Wikipedia and so on. But since it was of no real use to me, I switched it off and put it away, assuming that Amazon’s big bet had really paid off.
How wrong can you be? “Amazon Alexa is a ‘colossal failure’,” ran Ars Technica’s headline, “on pace to lose $10bn this year.” It was picking up on a long piece by Business Insider reporting that during the first quarter of this year Amazon’s worldwide digital unit, which includes everything from the Echo smart speakers and Alexa voice technology to the Prime Video streaming service, had an operating loss of more than $3bn, the “vast majority” of which was accounted for by Alexa and related devices and was the largest among all of Amazon’s business units.
So what went wrong? Basically, the business model underpinning Alexa failed to deliver. The company thought that the Echo device (which apparently was sold at cost) would lead people to buy more stuff on Amazon. And when more than 5m of the devices were sold in its first two years, that must have looked like a plausible idea, especially when it transpired Alexa was getting a billion interactions a week!
Sadly, it seems that most of those “conversations” with the device were rather like mine had been: trivial and inconsequential. And, as time went on, the “smart assistants” offered by the other tech giants muscled in on the market. Alexa, with 71.6 million users, now occupies third place but even the thought that the other two are also losing money on their gizmos will not provide much consolation for the Alexa team as its unit is slimmed down.
Amazon, which went on a hiring spree during the pandemic, is now, like all the big tech outfits, shedding jobs on an industrial scale; beginning this month, it plans to lay off 10,000 workers, quite a few of whom will probably be in its hardware division. So maybe the industry is about to discover that invasions – of homes as well as countries – don’t always work out as well as you hoped.
© 2015 Mutual Fund Observer. All rights reserved.
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Comments
Because the general concept of "tech" is so widespread, covering so many disparate areas, it seems to be somewhat self-supporting... maybe like a rainforest, where a certain critical mass is required, and once you start eating away at that mass the whole thing becomes increasingly unstable.
If that's conceptually true, then we might well be seeing a situation where certain pillars of modern technology are falling from previously unnoticed rot. Alexa and similar, some "social" networking, general privacy intrusion, the "metaverse", and of course "crypto" seem to be coming under increasingly negative scrutiny.
As long as there was the lure of these things as a new road to fabulous riches, various elements of our capitalist system were enthusiastically throwing money in that direction. Now, not so much, and the weakest of the so-called "tech" is being exposed for what it really is. Sometimes reality takes a while to be recognized.
ORK! I forgot: you must ALERT her by using her name before the command.) For a while, she played musical requests, then offered only a preview. Oops, gotta PAY for that. Are you interested? NO!
"Shut the f*** up, Donny!"
....But of course, we ALL know that. "Regulatory capture."
But the USA is also the land of the corporation being a person with same rights. So say the smartest justices this land has been blessed with -- Alito, Thomas and Scalia.
I dunno... those "corporation persons" seem to have a lot of better rights than the rest of us.
Pro Tip: change your Amazon wake-word to 'ziggy' ... it's the least-likely one that'll get triggered accidentally by others or TV commercials.
PS: I get no tailored ads due to my Echo use. But then again, I'm a securitygeek and do a lot of custom privacy stuff on my networks/devices anyway.
Meta fined €265m over data protection breach that hit more than 500m users-
Facebook, Instagram and WhatsApp have been fined nearly €1bn by EU since September 2021
Following are edited excerpts from this report in The Guardian: Note: Textual emphasis was added
This behavior is an enterprise version of risk taking behavior amongst CEO's who take big strategic gambles with huge diamond parachute payoffs if things work out but even if things go south still have a comfortable silver parachute. Meanwhile in a silver parachute scenario investors and employees are hosed. Heads I win, tails you lose.
This is entirely anecdotal but I have personal experience working in a Top 3 bank in the US where one aspect of ranking the priority of compliance projects was the size of the regulatory fine.
Once you remove jail time from the worst case penalty, all kinds of malbehavior occurs. To cite a real life example, several execs from Countrywide Financial were fined by the SEC for the toxic trash loans originated by Countrywide but the vast majority of the actual fines were paid by insurance firms and not by the culprits. The execs collectively parachuted out with more than $1B, were collectively fined less than $100M and paid less than $10M out of pocket. Heads I win, tails you lose. Staff and investors got pennies to the dollar.
https://www.cnbc.com/2019/05/10/former-countrywide-ceo-angelo-mozilo-says-crisis-wasnt-his-fault.html