Amazon’s efforts to monetize its Alexa-enabled devices have reportedly resulted in significant financial losses for the company, with estimates suggesting it has lost over $25 billion from its Echo, Kindle, and other products between 2017 and 2021, according to the Wall Street Journal. Internal documents and sources familiar with the situation highlight that, despite having hundreds of millions of customers using these devices, many are primarily using the Echo speakers for basic functions like setting alarms rather than shopping on Amazon.
A former senior employee expressed concerns over the company’s investments, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the challenges, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of Alexa. However, engineers working on this initiative have expressed doubts about its potential success, as they believe it may not lead to significant changes.
An Amazon spokesperson emphasized the company’s focus on the value created from customer interactions with its services rather than solely through device sales. They noted that the Devices & Services division has been successful in establishing profitable businesses and is positioned for future growth.
In addition, the new AI-powered Alexa, previewed in September, faces obstacles according to former employees who claim it is not near completion. The company purportedly lacks sufficient data and access to the necessary chips for the large language model driving the updated version of its virtual assistant. Moreover, Amazon is said to be prioritizing generative AI development for its cloud computing arm, Amazon Web Services.
Amazon refuted the claims from former employees, stating they are misinformed about Alexa’s AI capabilities. The company asserts that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to creating the best personal assistant possible.