Amazon’s ventures into monetizing its Alexa-enabled devices have reportedly fallen short, leading to substantial financial losses for the company, according to internal documents and sources familiar with the situation. Between 2017 and 2021, Amazon recorded losses exceeding $25 billion from its Echo, Kindle, and other devices.
Although Amazon has attracted hundreds of millions of customers to its devices, the Echo speakers are primarily used for basic functions such as setting alarms rather than for shopping on Amazon. A former senior employee expressed concerns over the substantial workforce dedicated to what they described as creating a “smart timer.”
In response to the challenges, Amazon’s CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of Alexa. However, team members working on this initiative have raised doubts about its potential effectiveness.
Despite the issues, an Amazon spokesperson highlighted the value generated through customer interaction with their services beyond device sales, stating that the Devices & Services organization has fostered numerous profitable endeavors for the company.
Additionally, former employees indicated that Amazon’s newly showcased AI-powered Alexa is far from ready, lacking the necessary data and hardware needed to operate a large language model. The company has also reportedly shifted its focus to developing generative AI for its cloud services, Amazon Web Services, rather than prioritizing advancements for Alexa.
Amazon has refuted claims made by former employees about its AI efforts, asserting that the Amazon Artificial General Intelligence team has adequate access to the required processing capabilities. The company emphasized that its goal remains to create the world’s leading personal assistant.