Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly resulted in significant financial losses, totaling over $25 billion from 2017 to 2021. According to a report from the Wall Street Journal, which references internal documents and anonymous sources, the online retail giant has struggled to monetize its popular devices like the Echo and Kindle.
Despite a vast customer base, users primarily utilize the Alexa-enabled Echo speakers for tasks such as setting alarms and utilizing free applications, rather than for shopping on Amazon. A former senior employee expressed concerns about the company’s direction, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In light of these challenges, Amazon CEO Andy Jassy is reportedly exploring new strategies, including the introduction of a paid version of Alexa. However, some engineers involved in the development of this paid tier have expressed skepticism about its potential effectiveness.
An Amazon spokesperson responded to the criticism, emphasizing the importance of the value created for customers using their services and highlighting the profitability of various segments within the Devices & Services organization. They reiterated the company’s commitment to creating successful business ventures moving forward.
In addition, the company’s newly announced AI-powered Alexa, unveiled in September, is reportedly facing developmental hurdles, with former employees indicating a lack of sufficient data and the necessary technology to support the advanced language model. Fortune has also noted that Amazon has shifted its focus away from the AI-powered version of Alexa to prioritize generative AI within its cloud computing division, Amazon Web Services.
Responding to these claims, Amazon disputed the assertions from former employees, maintaining that its Artificial General Intelligence team has access to essential in-house chips and Nvidia GPUs. The company reaffirmed its goal of developing “the world’s best personal assistant.”