Amazon’s strategy to monetize its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion from 2017 to 2021, according to internal documents and sources familiar with the matter, as reported by the Wall Street Journal. Despite boasting hundreds of millions of customers using devices like the Echo and Kindle, these Alexa-enabled speakers are primarily utilized for basic functions such as setting alarms and utilizing free apps, rather than facilitating purchases on Amazon.
A former senior employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, including plans to introduce a paid version of Alexa. However, some engineers working on this initiative have expressed doubts regarding its potential effectiveness.
An Amazon spokesperson emphasized the company’s commitment to creating value through services used by customers rather than merely through device sales. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward,” the spokesperson stated.
In addition, Amazon recently showcased its new artificial intelligence-powered Alexa, but former employees have indicated that the technology is far from complete. The company reportedly lacks sufficient data and access to the necessary chips to support the large language model (LLM) required for this upgraded version of its virtual assistant. Furthermore, Amazon has allegedly shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services, instead of prioritizing the AI-driven Alexa.
Amazon, however, has disputed these claims, asserting that its former employees are misinformed regarding its ongoing efforts in Alexa AI. The company claims that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs) and remains committed to building the world’s best personal assistant.