Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to the Wall Street Journal, internal documents indicate that Amazon lost over $25 billion from its Echo, Kindle, and various other devices between 2017 and 2021. Despite having hundreds of millions of customers, many users primarily rely on Alexa-enabled Echo speakers for basic tasks such as setting alarms rather than for shopping.
A former senior Amazon employee mentioned to the Wall Street Journal, “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 potential launch of a paid tier for Alexa. However, concerns have arisen among some engineers about whether this initiative will effectively address the issues.
An Amazon spokesperson emphasized that the company remains focused on creating value through its services and not solely through device sales. They stated, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In addition to these issues, the company’s new AI-powered version of Alexa, showcased in September, is said to be far from ready. Former employees noted that Amazon lacks sufficient data and access to the necessary chips for the large language model (LLM) that will enhance the virtual assistant. Furthermore, it appears Amazon has shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services, rather than the AI-driven Alexa.
Amazon has countered these claims, stating that former employees are misinformed about the current status of its Alexa AI initiatives. The company asserts that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, maintaining that their goal remains intact: to create the world’s best personal assistant.