Amazon’s initiative to monetize its Alexa-enabled devices has proven to be a significant financial setback, costing the company billions. According to internal documents and sources familiar with the situation, the online retail giant lost more than $25 billion on its Echo, Kindle, and other devices between 2017 and 2021.
Despite boasting hundreds of millions of customers using these devices, it turns out that many rely on the Alexa-enabled Echo speakers primarily for basic functions like setting alarms rather than for shopping on Amazon. A former senior employee expressed concerns about the extensive hiring and development efforts that have not translated into effective solutions, remarking, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the ongoing challenges, Amazon CEO Andy Jassy is reportedly seeking to innovate by introducing a paid tier for the voice assistant. However, some engineers involved in the development of this new version of Alexa are skeptical about its potential impact, according to the Wall Street Journal.
An Amazon spokesperson pointed out that the company’s focus extends beyond device sales to the value created through its services, asserting that the Devices & Services organization has successfully established profitable ventures and remains poised for future success.
Additionally, Amazon’s latest AI-driven version of Alexa, which was showcased in September, is allegedly not fully prepared for launch, as cited by former employees. The company is said to lack sufficient data and access to the necessary chips to implement the advanced language model powering the updated assistant. Sources suggest that Amazon has shifted its priorities away from this AI-enhanced Alexa to concentrate on developing generative AI for its Amazon Web Services division.
In response to these claims, Amazon has defended its current Alexa AI initiatives, stating that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s commitment to creating “the world’s best personal assistant” remains unchanged.