Alexa, is the voice assistant industry doomed?

A recent report that Amazon’s Alexa division is on track to lose $10 trillion this year raises questions about the future of the voice assistant industry as a whole.

“I think there’s a next-generation battle for voice support that’s going to require very, very deep pockets to survive,” said Andy Wu, assistant professor of business administration in Harvard Business School’s strategy unit.

AI-powered voice assistant software responds to spoken commands through enabled devices; This could include asking you to play music, look up general information, set timers, or order at a restaurant.

according to eMarketer market research companyAbout 24.2% of the US population will use Google Assistant this year, 23% will use Apple’s Siri, and 21% will use Alexa.

But as Harry Guinness, writing in Popular Science , what stands out is that Siri and Google Assistant are pre-installed on phones, and Alexa is mainly available on smart speakers.

“To thrive in modern society, you need a smartphone, but no one needs a smart speaker,” he wrote.

According to A 2021 report, Smart speaker ownership peaked last year, with nearly 50% of US internet users owning at least one smart speaker.

However, the Amazon division responsible for Alexa, Alexa-powered Echo devices and Prime Video streaming posted a loss of more than $3 trillion in the first quarter of this year, according to a Business Insider report.

The report attributed the majority of that loss to Alexa, adding that the division itself is on track to lose more than $10 trillion in 2022.

Meanwhile, Google Assistant and Apple’s Siri they are said to be also in the fight to fully monetize these services.

While the devices – at least in the case of Amazon’s Alexa Echo – are sold for a price, the services on the devices are not profitable. As Business Insider reported, Alexa might be getting a billion interactions a week, but most of those conversations were trivial commands to play music or ask about the weather.

All this has some analysts wondering: are all voice assistants doomed?

“We have to ask: Is Big Tech running out of time for voice assistants? Everyone seems to be struggling with them,” wrote Ron Amadeo, reviews editor at the science-technology website Ars Technica.

There is no clear monetization model

According to Wu, it’s no wonder these companies are taking such huge losses on voice assistants.

“The investment in AI technology is incredibly expensive, and then the server space required to process all these things is enormous… Even at the device level, they’re definitely losing a lot of time in the bill of materials,” he said.

“And therefore, in the short term, there is no very clear model for making money.”

These companies are pouring in a lot of money, Wu said, because they see voice assistant technology as the next evolution of the computer interface, similar to the mouse or touchscreen.

“We’ve seen that they’ve already been willing to take big losses. But what we don’t know yet is whether or not voice assistant technology is what we’d call a ‘winner-takes-most’ market. Or whether or not it’s going to be a more fragmented market?” he said

Microsoft, with its Cortana voice assistant technology, has already been phased out, Wu said, as have other companies.

That means the market may not be big enough to support more than one major player, he said. But between Google and Amazon, Wu said he sees Google continuing to struggle.

“I think there’s a bigger connection between AI technology and Google’s overall investment in AI. I think Google would want to move forward, no matter what, to the extent that voice is the next generation of computer interfaces that will completely disrupt their traditional text-based search. – business”.

What remains the main obstacle, experts say, is consumer knowledge; consumers are not fully aware of the capabilities of their devices.

Alexa, for example, has thousands of connected apps – or what Amazon calls “skills” – that can be used to order food, go through a recipe or, in a connected home, even turn on the washing machine.

“Most people don’t know about the majority of these skills, and that’s really a marketing or advertising problem because there’s no convenient way for people to learn about apps,” Wu said.

More marketing is needed

Navid Bahmani, an assistant professor of marketing at Rowan University in Glassboro, NJ, agreed that the main challenge for voice technology – and the companies that support it – is consumer adoption.

“They need to do a lot more marketing of the device and its capabilities,” he said. “[There’s a] because they don’t know a lot of things that consumers can’t do.”

Consumers are often aware of the basic features that come out of the box, he said, but aren’t fully informed about all the different companies coming out with apps that expand their devices’ capabilities.

“It’s like buying a smartphone and not knowing there’s an app store,” he said.

However, Bahmani is optimistic about the future of the industry.

“My view is, no, the industry is not going anywhere,” he said. “If anything, it’s very early in its stages. It’s going to grow.”