Once the darling of her family, Alexa has grown up and become that teenager who steals her parents' credit card and heads to the mall on a wild Sunday afternoon shopping spree, racking up charge after charge with no intent on ever paying the money back.
It was both shocking and genuinely unsurprising to see the Wall Street Journal report a few days ago that outlined how Amazon's Alexa unit has been operating at a roughly $5 billion annual loss for years now. It was shocking because a $5 billion deficit feels massive for a product line as ubiquitous and seemingly successful as Alexa. It was genuinely unsurprising because it seems that if you so much as smile at Andy Jassy the right way he'll give you one for free. There are two reasons Apple's HomePod was priced at $349 when it was first released: Apple likes to overcharge for new devices in their first year because Apple knows people will pay anything Tim Cook asks them to, and because it costs a crap ton of money to develop the technology that enables a smart speaker. There was no way Alexa was going to recoup that investment by selling a bunch of $15 Echo Dots.
Seeing layoffs in Silicon Valley isn't fun, and it's not like I'm sitting here rooting for a recession. But the longer this tech winter rolls on, the more obvious it's becoming that Big Tech was in desperate need of some spring cleaning. For the last five years, companies like Amazon and Google and Facebook were allowing themselves to throw money at anything and everything that seemed interesting provided they could make some vague argument about how it furthered the company's mission or how it helped "drive the core business." It's becoming clear now that many if not most of these investments were about as unlikely to generate any returns as a public library in a dementia care facility. There's literally an entire website dedicated to memorializing all the side-projects started and killed by Google, and you can count each gravestone as thousands if not millions of dollars burned.
I know Jeff Bezos dreamt of a world where we would all sit on our couches and casually flip through The New Yorker while yelling at Alexa to order more dishwasher soap to the house. That never happened. I trust Alexa setting a timer for my meatloaf, but I don't trust her charging my credit card yet. And I don't think I'm alone. And considering these devices were often being sold with prices in the low double-digits, I think everyone assumed Amazon was taking a loss on the hardware itself. So...what was or is Amazon's plan here? Is Alexa a charity now?
Recessions aren't all bad. Death is life's change agent, and recessions are capitalism's change agent. They're how we get rid of bad ideas, or at least how we significantly shift bad ideas into good ideas. Swelling corporate profits gave Big Tech all the funds it needed to explore whatever passion projects it wanted, but this looming recession is quickly revealing the good ideas from the bad, and I think the greater level of fiscal and ideological discipline Big Tech hopefully comes out of this with will be a very positive outcome of this downturn.
In other words, it's time to steal the credit card back from Alexa.
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