Amazon’s strategy to monetize its Alexa-enabled devices has reportedly resulted in significant financial losses, totaling over $25 billion between 2017 and 2021, according to internal documents and sources familiar with the situation. Despite having hundreds of millions of customers for its devices, Amazon’s Echo speakers are primarily utilized for basic functions like setting alarms rather than for shopping.
A former senior Amazon employee noted concerns over the company’s investments, commenting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, CEO Andy Jassy is seeking solutions and plans to introduce a paid version of the voice assistant, although some engineers fear it may not lead to substantial changes.
An Amazon spokesperson emphasized the company’s commitment to creating value for customers using its services, rather than focusing solely on device sales. The spokesperson mentioned that Amazon’s Devices & Services organization has previously established several profitable ventures and is poised to do so in the future.
Additionally, sources indicate that Amazon’s AI-driven Alexa, which was showcased in September, is still in development and lacks sufficient data and access to necessary hardware to support the large language model intended for the updated assistant. Reports suggest that the company is prioritizing the development of generative AI for its cloud computing arm, Amazon Web Services, over the AI evolution of Alexa.
However, Amazon has countered claims from former employees, asserting that its Artificial General Intelligence team has the requisite resources, including in-house chips and Nvidia GPUs, to advance its plan to create “the world’s best personal assistant.”