As Amazon floods the market with Alexa devices, the business model is getting fresh scrutiny.

Written by on September 28, 2019

Following the runaway success of the original Echo device, Amazon has launched a dizzying number of new Alexa-powered products to get its gadgets in more living rooms and kitchens.

The company continued with that approach this week, announcing over a dozen new voice-controlled products, including wireless earbuds and smart glasses that can interact with Alexa.

Amazon has found a massive audience for its portfolio of Echos, giving the company a clear early lead in the burgeoning voice assistant space. But some investors and analysts are starting to question the financial strategy behind Alexa and whether there’s a profitable business model emerging for the devices and underlying technology.

“Amazon has successfully shipped millions of devices to millions of customers — but to what end?” said Andrew Murphy, managing partner at Loup Ventures, which invests in start-ups and publishes research on consumer technology. Murphy said he owns Amazon shares personally, though the firm does not.

After the last Christmas holiday season, Amazon said it had sold over 100 million Alexa-powered gadgets, and a report soon after from Consumer Intelligence Research Partners showed Amazon with 70% control of the U.S. smart speaker market. Unlike Apple, which commanded only 6% of the market at the time, Amazon isn’t aiming to make money off device sales but sees them as a means for getting customers into the Amazon universe, where presumably they’ll spend in other ways.

Source: CNBC


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