Amazon’s strategy to monetize its Alexa-enabled devices has reportedly resulted in substantial financial losses, with the company losing over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. This information comes from internal documents and sources cited by the Wall Street Journal. Despite attracting hundreds of millions of users, Amazon’s Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms rather than shopping on the platform.
A former senior employee expressed concern, 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 exploring solutions, including the introduction of a paid version of Alexa. Nevertheless, some engineers involved in developing this paid version have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value beyond just device sales, claiming that the Devices & Services division has successfully established various profitable ventures and is set to continue this trajectory.
In parallel, Amazon’s new AI-enhanced version of Alexa, previewed in September, is reportedly far from ready, according to former employees. The company allegedly lacks sufficient data and the necessary hardware to support the advanced large language model (LLM) driving the upgraded assistant. Furthermore, Amazon has reportedly shifted its focus from the AI-enhanced Alexa to developing generative AI solutions for its Amazon Web Services cloud division.
Amazon countered these claims, asserting that its former employees’ assessments of the Alexa AI initiatives are inaccurate. The company noted that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reiterating its commitment to creating “the world’s best personal assistant.”