25 November 2022. Technology | Climate

Alexa, have you got a problem? // “Yes, the planet got destroyed…”

Nov 25, 2022

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1: Alexa, have you got a problem?

Not so long ago, a little while after Amazon launched Alexa, its smart speaker system, my feeds were filled with stories about how this was going to be Amazon’s gateway into the home. It would only a matter of time before the data its speaker was collecting would ensure Amazon could control the relationship it would have with the customer. It was a pet project of the then CEO Jeff Bezos, who could see things in the market that eluded the rest of us.

And of course, the implicit assumption in these articles was that because the product had been launched by a large company, it was only a matter of time before it became a mass consumer product. (The same things were said of the Apple Watch). Alexa was going to be everywhere.

Or maybe not.

(Image by Smart Home Perfected. CC BY 2.0)

Because one of the stories buried in the news that Amazon is about to lay off 10,000 staff is that Alexa is generating serious financial losses—in the billions of dollars.

And since we remember the shiny turtlenecked hurrahs of the launch, but don’t always notice the slow decline, it’s worth pausing for a moment to notice what just happened:

Alexa never managed to create an ongoing revenue stream, though, so Alexa doesn't really make any money. ... Just about every plan to monetize Alexa has failed, with one former employee calling Alexa "a colossal failure of imagination," and "a wasted opportunity." This month's layoffs are the end result of years of trying to turn things around.

By 2020, even Bezos was losing interest in Alexa. He’s no longer CEO, and his successor Andy Jassy seems even less interested. But maybe there just wasn’t a business model there to start with. The devices were sold at cost, because the company thought it would make money when people interacted with it:

(T)he hope was that people would buy things on Amazon via their voice. Not many people want to trust an AI with spending their money or buying an item without seeing a picture or reading reviews. The (Business Insider) report says that by year four of the Alexa experiment, "Alexa was getting a billion interactions a week, but most of those conversations were trivial commands to play music or ask about the weather."

Attempts to partner with companies such as Uber and Domino, so that Amazon could get a cut of a transaction, didn’t work out: "By 2020, the team stopped posting sales targets because of the lack of use." The Alexa team, under pressure, tried to portray Alexa as a product user by higher value Amazon customers, but it turned out that wasn’t true. In fact, the “contributions” of Alexa users "often fell short of expectations."

Jassy says that Amazon is still “pursuing Alexa with conviction”, but the weight of this conviction will be being carried by a much smaller staff in the future.

Alexa is in third place in the US “smart speaker” market, with Google in first place and Apple second, although the market shares of all three are comparable. (According to Business Insider, Amazon has 71 million users, Google 81 million, with Apple more or less in the middle of this range, although its not clear from the story what constitutes a “user” here, and other sources have different numbers.)

The Ars Technica story goes on to ask if this is just an Amazon problem, or whether the whole market is struggling. It turns out that Google is having pretty much the same problems that Amazon is having:

There's an inability to monetize the simple voice commands most consumers actually want to make, and all of Google's attempts to monetize assistants with display ads and company partnerships haven't worked. With the product sucking up server time and being a big money loser, Google responded just like Amazon by cutting resources to the division.

Apple has a different model, and it certainly didn’t subsidise its first smart speakers:

The original HomePod's $350 price was a lot more expensive than the competition, but that was probably a more sustainable business model. Apple's model didn't land with consumers, though, and the OG HomePod was killed in 2021. There's still a $99 "mini" version floating around.

Allegedly Apple is thinking about resurrecting its top end speaker, but I’m not sure that I’d be holding my breath.

What struck me when I read the story was that a lot of these devices have shipped—in fact, an industry analysis from earlier this year—reported that the US market 95 million adults have a smart speaker and 50% of those use it every day. But after a pandemic surge, market growth has pretty much stalled, with market penetration stuck in the mid-30 per cent range.

So there are some interesting things going on here. It’s a product which maybe 15% of the US population finds a lot of use in, but they use it in ways that don’t make money for the businesses that provide product or service. The providers have already responded to this by scaling back the services they offer, and cutting back on development. This is a recipe for a slow death spiral. If I were a smart speaker user, I’d be worried about the companies switching the service off.

2: “Yes, the planet got destroyed…”

"Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.

This is the punchline for one of the most famous cartoons about climate change, and it celebrates the 10th anniversary of it publication today.

So what better day to run a story from Inside Hook magazine with its cartoonist Tom Toro about it? In fact, the cartoon almost didn’t happen:

I was actually planning to take the week off because I was on a writing retreat with my friend. He had something else that he had to do that particular morning, so I was like, oh, I have a few hours, I’ll just throw together a batch for The New Yorker, even though I wasn’t planning to do them that week. So I sketched up some rough ideas really quick.

Well, usually The New Yorker is usually pretty chilled about the cartoons that get sent into it by its contributors. They can sit around for weeks before they decide if they are going to use them. But not on this occasion:

(T)he editor Bob Mankoff reached out and said, “We want this cartoon immediately. We want it this week,” which almost never happens... times. I wasn’t at home, I wasn’t at my studio, my friend and I were off in some rented place, so I had to hurry back home and do the artwork that night. It’s probably the fastest cartoon I’ve drawn. I usually agonize over things, but I had to draw it really quickly and send it off because they had to put it out in the magazine.

But in his haste, he did change one thing: the caption.

I initially had it (as), “Yes, the planet got destroyed, but for a beautiful moment in time we created a lot of money for shareholders,” and I changed that to “value.” That was the one edit that I did. I think that “value” is funnier because it’s more of a corporate, vague term.

I always like those moments when people explain their last minute creative decisions. Because, as Tom Toro puts it, this is “a hedge fund guy” sitting around in a blighted landscape, talking to a couple of kids. But:

It sounds like what you would say as part of your deck pitch in a sales meeting or something.

Signed versions of Tom Toro’s cartoons, including this one, are available through his Etsy store.

j2t#398

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