Amazon’s strategy for monetizing its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021. Internal documents and sources familiar with the situation reveal that despite a wide user base for devices like Echo and Kindle, many customers primarily utilize them for basic functions such as setting alarms rather than making purchases.
Concerns about the utility of the Echo devices have been expressed by former employees, with one 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 solutions, including the introduction of a paid tier for its Alexa voice assistant. However, some engineers involved in the development are skeptical about its potential impact.
An Amazon spokesperson emphasized that the company prioritizes the value created through customer engagement with their services rather than just device sales. They noted that Amazon’s Devices & Services division has established several profitable businesses and is optimistic about future prospects.
In addition, the rollout of a new AI-driven version of Alexa has faced setbacks, with former employees indicating that it is far from ready due to insufficient data and limited access to necessary chips. Reports suggest that Amazon has shifted its focus towards generative AI development for its cloud computing platform, Amazon Web Services.
Amazon has refuted claims made by former employees, asserting that its Artificial General Intelligence team has access to required hardware for Alexa’s advancement, reaffirming its commitment to developing a leading personal assistant.