Amazon’s efforts to monetize its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, from 2017 to 2021, Amazon lost over $25 billion on products like Echo and Kindle. Despite having hundreds of millions of customers using these devices, the primary functions of the Alexa-enabled Echo speakers are setting alarms and accessing free applications, rather than facilitating purchases on Amazon.
A former senior employee expressed concerns about the company’s investment, noting that hiring thousands of people has resulted in a smart timer rather than a profitable product. In response, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of Alexa. However, some engineers doubt the paid tier will significantly impact the business.
An Amazon spokesperson commented that the company aims to create value through its services rather than just focusing on device sales. They emphasized that the Devices & Services organization has successfully established various profitable ventures and is positioned for future success.
In addition, reports suggest that Amazon’s new AI-powered version of Alexa, showcased in September, is far from readiness. Former employees indicate that the company lacks sufficient data and access to the necessary chips to run its large language model (LLM). Furthermore, Amazon is said to have shifted its focus from AI development for Alexa to prioritizing generative AI for its cloud computing division, Amazon Web Services.
In response to these critiques, Amazon asserts that the claims made by former employees are inaccurate and that the Amazon Artificial General Intelligence team has access to both in-house chips and Nvidia GPUs. The company reiterated its commitment to developing the world’s best personal assistant with its Alexa platform.