Amazon’s strategy to monetize its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021. According to internal documents and insights from individuals familiar with the company’s operations, the online retail giant’s Echo, Kindle, and other devices have not generated the anticipated returns.
Even though Amazon boasts hundreds of millions of customers for its devices, the usage of Alexa-enabled Echo speakers appears to be primarily for setting alarms and utilizing free applications, rather than facilitating purchases on Amazon. A former senior employee expressed concerns about the efficiency of the investments, saying, “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 seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers working on this version of Alexa express skepticism about its potential impact.
An Amazon spokesperson clarified the company’s focus, stating, “We are focused on the value we create when customers use our services, not just when they buy our devices.” The spokesperson expressed confidence in the success of its Devices & Services organization and its ability to sustain profitability in the future.
In addition, reports indicate that Amazon’s newly developed AI-powered version of Alexa, showcased in September, may not be fully operational yet. Former employees have indicated that the company lacks the necessary data and access to critical chips for the large language model driving the revamped assistant. Furthermore, Amazon has allegedly shifted its priorities to emphasize generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon contends that the perspectives of former employees are incorrect and lack insight into the current state of Alexa’s AI development. The company maintains that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs, emphasizing its commitment to creating “the world’s best personal assistant.”