Amazon’s efforts to monetize its Alexa-enabled devices have seemingly fallen short, leading to substantial financial losses for the company. According to internal documents and anonymous sources cited by the Wall Street Journal, Amazon lost over $25 billion on devices such as the Echo and Kindle from 2017 to 2021. Despite having hundreds of millions of customers for its various devices, many users primarily utilize the Alexa-enabled Echo speakers for simple tasks like setting alarms rather than making purchases through Amazon.
A former senior Amazon employee remarked on the situation, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is reportedly looking for solutions and is set to introduce a paid tier for the Alexa voice assistant. However, engineers working on this paid version have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers when using their services, rather than solely relying on device sales. They stated that the Devices & Services division has established multiple profitable ventures and is well-positioned for future success.
At the same time, Amazon’s recently showcased AI-enhanced Alexa is reportedly not ready for release, according to former employees. The company reportedly lacks sufficient data and access to the necessary chips to operate the advanced large language model driving the new version of its virtual assistant. Additionally, Amazon is said to have shifted its priority toward developing generative AI for its cloud computing arm, Amazon Web Services.
In response to these claims, Amazon disputed the characterizations of its former employees, asserting that they are misinformed about the current state of its Alexa AI projects. The company maintains that its plans for Alexa continue to focus on building the world’s best personal assistant.