Internal docs show Amazon is struggling to retain Alexa device users; in some years between 2018-2021, 15%-25% of new users were no longer active after one week
BloombergPriya Anand
Context & Ripple Effects
Amazon had already built a large Alexa installed base, but related coverage found that only 2% of roughly 50 million owners had used Alexa to make a purchase in 2018, with most not returning to try again—evidence of weak commercial engagement among Alexa owners. The newly reported one-week inactivity figures make retention, rather than device shipments, the central constraint on Alexa's business case.
Later coverage tied that constraint to Amazon's broader devices economics: Echo hardware was reportedly sold near cost while Alexa monetization plans had failed, and the low-price-hardware strategy was later reported to have produced multibillion-dollar devices losses.
First-order effects
Amazon's Alexa team faces a smaller active audience than new-device additions imply, limiting the near-term value it can extract from each cohort of Echo and other Alexa-device users.
The retention data weakens the premise that subsidized Alexa hardware can be justified by downstream purchases or services, given the earlier low rate of Alexa purchasing.
Second-order effects
Amazon's devices group must put more weight on repeat use and revenue per active device, rather than unit sales, to support continued low-margin Echo distribution.
Low engagement makes attempts to monetize Alexa more difficult, reinforcing the devices-business losses subsequently reported in Amazon's low-price hardware strategy.
Third-order effects
If active use remains detached from device adoption, voice assistants are likely to be judged as costly distribution channels rather than self-sustaining commerce platforms.
The pattern favors assistant strategies tied to recurring, workflow-native use cases over broad consumer gadget adoption, where commercial intent is sparse.
The trend: Consumer voice assistants are shifting from an installed-base growth story to a test of whether active usage can sustain device-led monetization.
Audio is a *tough* interface to get right. People underestimate the value of visual cues, not just to tell people what to do next but also as a reminder. https://twitter.com/...
Feel like this is the best single-sentence explanation for why Silicon Valley has switched to selling cryptocurrency as the future https://www.theverge.com/... https://twitter.com/...
For me so far, voice control is something that I use—just a lot less than tapping and typing. It's supplementary to other forms of input. https://www.bloomberg.com/...
Sounds about right and the numbers for Google are probably similar. Set an alarm. Check the weather. Turn on the lights. Bluetooth speaker. That's all I use mine for. They never solved discovery for other functions. https://www.bloomberg.com/...
This would line up with much of the smart assistant user behavior research @caro_milanesi and I have done over the years. Only a handful of actions are used regularly and can be measured as “micro” engagements. https://twitter.com/...
You aren't a successful software company until you have a hardware business that consumes a lot of capital and whose economics are upside down compared to your software business. It's basically a rite of passage at this point.
Amazon has over 10,000 people working on Alexa & Echo and it's turned out to be a glorified Bluetooth speaker and alarm clock. 25% of users stop using it by week 2 and the market expected to grow 1.2% a year going forward. I wonder when they'll cut bait https://www.bloomberg.com/…
Worried about dwindling engagement, Amazon added nudges to Alexa to remind people that the device is really, really useful. 🥴 https://www.bloomberg.com/... https://twitter.com/...
Each holiday season since 2015, Amazon has counted on selling a lot of its Alexa-enabled smart speakers. For almost as long, it's known that the devices have had trouble holding customers' attention even into January, internal documents show https://www.bloomberg.com/...
this is the primary reason I've been switching my home over to HomePods and Siri control, even if that's inferior in a number of ways. it wasn't privacy concerns, it wasn't because of speed, it wasn't because of lack of features. it's because Alexa has gotten too damn annoying.
Alexa costs Amazon a ton of $$$. But now we have a better sense as to how much. The company projected the fixed costs alone for the division would hit $4.2 billion in 2021
Amazon has tried many things — even an Alexa-powered microwave — to get users to engage with the voice assistant in new ways. Still: Alexa users discover half the features they'll ever use within their first 3 hours of using it, per a 2019 document
Lots of interesting revelations about Jeff Bezos's old pet project. Last year, Amazon projected the smart speaker market — which it pioneered with Alexa devices — would only grow about 1% over the next several years, according to the documents
this would explain why Alexa incessantly asks “By the way, did you know i can do this?” after every simple voice request for the past year or so https://www.bloomberg.com/...
news: Amazon sells lots of Alexa devices during the holidays. For customers, the novelty fades fast. There have been years when 15% to 25% of new Alexa users were no longer active in their second week with the device, according to internal documents https://www.bloomberg.com/...?…
Reminds me of Bezos's warning that his company was incubating several multibillion $$$ failures, 'cause that was the appropriate scale for a business its size https://twitter.com/...
Money & cool technology is not enough: Amazon spends as much per year on Alexa R&D as the total R&D spending of Hong Kong and Saudi Arabia combined. So far, though, there is no killer app for voice AI; everyone is just setting timers & listening to music. https://www.bloomberg.co…