Amazon’s efforts to monetize its Alexa-enabled devices have reportedly resulted in significant financial losses, totaling over $25 billion from 2017 to 2021, as per internal documents and sources familiar with the situation. While the company boasts hundreds of millions of customers for its devices, its Echo speakers, which are powered by Alexa, are predominantly used for setting alarms and accessing free apps rather than for shopping on Amazon.
A former senior Amazon employee expressed concern about the situation, 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 reportedly exploring remedies, including the introduction of a paid version of the voice assistant. However, some engineers involved in the project have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized that the company is prioritizing the value generated for customers through its services, rather than merely focusing on device sales. They highlighted the profitability of several businesses within the Devices & Services organization and expressed confidence in their future performance.
On another note, Amazon’s new AI-powered version of Alexa, demonstrated in September, is said to be far from ready. Former employees noted the company lacks sufficient data and access to necessary processing chips for the large language model driving the new assistant. Additionally, Amazon has shifted its priorities towards developing generative AI for its cloud computing division, Amazon Web Services.
Amazon disputed claims made by former employees, insisting they are misinformed about the current state of its Alexa AI initiatives. The company stated that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs), reaffirming its commitment to building a leading personal assistant.