Amazon’s efforts to monetize its Alexa-enabled devices have reportedly resulted in significant financial losses, with the company losing over $25 billion from 2017 to 2021 through products like the Echo and Kindle, according to a report from the Wall Street Journal that references internal documents and sources familiar with the situation. Despite amassing hundreds of millions of users, it appears that many consumers primarily utilize the Echo speakers for basic functions such as setting alarms rather than engaging in shopping.
A former senior employee expressed concerns about the company’s trajectory, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid version of Alexa. However, some engineers working on this initiative have expressed skepticism about its potential impact.
An Amazon spokesperson responded, emphasizing the focus on creating value for customers through services, not just device sales, and noted that the Devices & Services division has successfully established several profitable ventures within the company.
Additionally, the newly announced AI-powered version of Alexa, which was showcased in September, reportedly faces development hurdles. Former employees claim that the project lacks the necessary data and access to the technology required to operate the advanced language model underpinning the update. Amazon is said to be reallocating resources to prioritize generative AI development for its cloud services division, Amazon Web Services.
In response, Amazon disputed the claims of former employees, asserting that the teams have access to the requisite technology and reaffirming their commitment to developing “the world’s best personal assistant” with Alexa.