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Comment by achow | Hacker News Reader

2020 - It took Amazon four years to populate the world with 100 million Alexa-powered devices. It took the company just one more year to more than double that number. The e-commerce titan announced Monday that there are now "hundreds of millions of Alexa-enabled devices" in customers' hands worldwide, a massive increase from the 100 million it announced last January. https://www.cnet.com/home/smart-home/amazon-sees-alexa-devic...

Annual sales ~100 million device, then losing $50/device would lead to a figure of $5 billion loss in a year. Loss of $50/device would include cost for running R&D, running factories, giving minimum guarantee to factories, and all other associated cost - marketing, customer acquisition, support etc..

So $10B loss in a year sounds in the realm of possibility.

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Alexa-powered does not necessarily mean Alexa devices made by Amazon though.

For example: I own a multiroom speaker setup not made by Amazon that is Alexa-enabled, all speakers could run Alexa if I had set them up for it (which I won't, ever), and they're very likely counted on this metric. I can remember a multitude of other speakers and devices with an Alexa-enabled badge on their packaging that aren't made by Amazon.

It'd be good to have hardware figures for sales of Amazon's own devices.

Good point.

However, supporting all the 'partner devices' comes with associated cost in terms of engg' development and support (somewhat like what Android must be dealing with. Android division in Google would not be a low cost division I'm sure).

It surely does, I work at a place where we also have to deal with multiple partner integrations across multiple vendors and types of devices for our products, there's some overhead for it but not nearly as much as one would expect.

One would not be able to imagine when things operate at mega scale (FAANG level), with world conquering ambitions at Exec level, and particularly in consumer domain.

I was at MS when Windows was a 'thing'. Windows was purely about software, the complexity and support requirements scales in logarithmic scale as more and more OEMs gets involved with their unique hardware, business constraints and cultures.

I work for a pretty sizeable corporation, a household name you have heard of or use products from. I don't want to dox myself too much but I can say we are not MS level of support of OEMs (because that's a quite ridiculous bar to cross, haha) but still we do have quite a few integrations across multiple consumer device types.

Assuming you're referring to Sonos -- while they were once the best, they seem to just not work well anymore. I'm lucky if I can get it to function correctly. I've observed my brother's Chromecast whole-home audio which cost him a fraction of the price and has a ton more variety - and I'm thinking I may ditch my Sonos setup.

Building your own is also ridiculously simple and as cheap or expensive as you’re willing to spend on speakers and/or drivers.

My setup is from Audio Pro, a Swedish brand. Never really thought Sonos were good value for the price and sound quality to be honest... Not an audiophile but I always look for the best bang for the buck I'm spending on audio.

Strange. I recently purchased some Sonos products and haven’t had any issues whatsoever. They’ve been absolutely fantastic for me.

What issues are you experiencing? Wonder if it’s something I can keep a look out for.

My Sonos speakers has been kind of buggy but I also have a brand new google home and it is not any better. I am thinking the blame is on google assistant. Google assistant seems to do a much better job understanding me but is inconsistent with nearly identical input. Alexa seems to be worse but is at least consistent.

I switched my Sonos speaker over from Alexa to Google and it’s working well enough now.

Nice numbers but don't those Alexa enabled device bring in revenue offsetting the cost and limiting the loss? Or doesn't anyone have an Amazon premium account or buy anything with Alexa on Amazon?

You'd really want to show that people bought more stuff due to Alexa than they would have otherwise. Tapping out an order on a smart phone is already pretty damn convenient so that's actually a high bar to clear.

We have I think… 5? Echo devices in my house, including an echo dot Amazon just sold me for $1 because it was my “Primeaversary". I haven’t purchased a single thing through them.

"Hey Alexa, I need a new pan, mine is old and broken" - "I have the Pan Frying Pan Cooking Pan Cooking Children Family Happy Best Pan from Fhrgwdsst for $14.99, would you like me to order it for you?"

I think my favorite notification was a few months ago—my echo speaker turned yellow because there was a notification. My kids find this incredibly exciting, and told Alexa to play it. And then Alexa announced to us, in breathless terms, that bananas are a good source of potassium. It even said "this is B A N A N A S", as only a robot can.

Humor probably helps a lot with making people feel better around these devices. Are you using it for anything non-trivial?

Maybe, but it wasn't funny so much as dumb and pointless. And: no, I just use it as a speaker and for setting timers.

Very curious why you would wiretap your home with 5 always-on internet-connected speakers running opaque software for a tech giant.

I dunno, it's the sort of thing that would be fit for a robocop-like dystopia just a couple decades ago but is seemingly... "normal" now.

Because they're convenient. In my house, you'll hear - Alexa, when is the Bills game? Alexa, when is daylight savings. Alexa, play Christmas music. Alexa, what is the etymology of wanker? Alexa, is Chipotle still open? Alexa, how old is Patrick Maholmes? Alexa, what time is it in Kenya? Alexa, ad nauseum.

If Amazon wants to datamine the dickens out of that to sell me more socks and USB cables, I really don't care.

Actually Alexa gets most of those same requests in my house, too ;-) Anyway, it's at 12:30.

Isn't this the most trivial and minor of conveniences? Wouldn't it take roughly the same amount of time to pick up your phone and type that? Don't you feel the least bit uncomfortable that the trade-off for that is that a tech giant gets a 24/7 audio feed into your and your family's home?

Boggles the mind.

The expected value of harm caused by tech giant listening to my house = 0. Trivial and minor > 0.

Not everyone's paranoid about that kind of thing and not everyone actually values privacy that much

We leave most of them on "mute" most of the time. The one we don't, we use to play music, mostly.

There is no such thing as mute

Maybe. The cameras have a physical shutter that you can keep closed, but the mute buttons are always just an electronic button that you have to trust Amazon to respect. Still, I don't think I've seen anybody claim that Amazon is lying about it, and there's enough people on the internet—especially here—that monitor their traffic, and would have noticed if echo devices were sending recordings that they shouldn't have taken.

From the article you’re commenting on:

One internal document described the business model by saying, "We want to make money when people use our devices, not when they buy our devices."

That plan never really materialized, though. It's not like Alexa plays ad breaks after you use it, so the 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 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." Those questions aren't monetizable.

Why would they need to spend billions on validating that model though? Wouldn't it be enough to have just a 1000 or even 100 devices to test it?

The article says that the hardware was generally sold at cost, though.

Doesn't that mean cost of materials/COGS though?

Which doesn't include the overheads (engineering and staff, development and maintenance of back-end services, legal and compliance and all the rest) that you would normally plan to cover with the gross profit on the device.

It's a good question what exactly they meant by 'at cost', but it's at least going to be the plain hardware cost (plus maybe shipping), I suppose. And the point of the parent and GP was that the overheads shouldn't be that significant either, so it is still a bit of a mystery where exactly they spent that much money.

Even if the hardware is sold at cost, you still have to pay for running the service.

article said sell "at cost" not "at a loss"

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