Amazon’s Alexa is a big hit — and a huge money drain

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Connect the Amazon Echo Dot to your existing speaker system, and you bingo! -- your speakers just got smarts.
Expensive things come in small packages. From an R&D perspective, at least.
Photo: Leander Kahney / Cult of Mac

Amazon’s Alexa devices were some of the most exciting tech products of 2016, and immediately there were rumors that Apple was planning to follow suit with a standalone Siri — possibly even with the addition of facial recognition tech.

A new report, however, claims that despite its popularity, Alexa has been a massive money drain on Amazon so far. In 2016 alone, it lost Amazon $330 million, and this figure is set to rise to $600 million-plus this year.

It’s an interesting report, and one that is a stark reminder of the kind of costs a company like Apple would incur were it to go up against Echo. Sure, it’s got the money to fund it — but it also wouldn’t a license to print money any time soon.

Bloomberg report back in September last year suggested that Apple has been investigating a standalone Siri device for around two years, and that it recently entered the prototype testing phase.

Much like the Amazon Echo, this device would be able to look up information and control smart home appliances using voice recognition — but possibly include facial recognition tech, courtesy of Apple’s acquisition of facial recognition startups Faceshift and Emotient.

But it’s worth pointing out that even with no sign of Alexa profits in sight for Amazon (provided today’s report is correct), Apple has plenty of ways a similar product could be a driver of profit. Investment in Siri can also help improve the user experience of iPhones, iPads, Apple TVs and, potentially in the future, other products like a possible Apple Car, thereby driving sales.

It could also be invaluable as a way of driving HomeKit-related purchases and, were licensing deals to be worked out, potentially another source of revenue as Apple continues its march toward being a services company.

Would a standalone Siri be something you’d get excited about? Leave your comments below.

Source: FT (paywall)

Via: Overspill