Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. Internal documents and sources familiar with the situation indicate that Amazon lost more than $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, according to the Wall Street Journal. Despite having hundreds of millions of users, the Alexa-enabled Echo speakers are primarily used for setting alarms and accessing free applications rather than shopping on Amazon.
A former senior Amazon employee expressed concerns about the company’s direction, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response, Amazon’s CEO Andy Jassy is reportedly pursuing a solution by introducing a paid version of its voice assistant. However, some engineers involved in the project are skeptical about its potential effectiveness.
An Amazon spokesperson emphasized that the company is focused on the value generated when customers use its services rather than solely on device sales. They highlighted that the Devices & Services organization has established several profitable ventures and is positioned to continue this trend.
Additionally, Amazon’s newly developed AI-powered Alexa, which was showcased in September, is said by former employees to be far from ready. Reports suggest the company lacks sufficient data and chip access required to support the new large language model driving the assistant. There are also indications that Amazon has deprioritized the AI-enhanced version of Alexa in favor of advancing generative AI for its cloud computing division, Amazon Web Services.
In response to these concerns, Amazon disputed claims made by former employees, stating that they are misinformed regarding the progress of its Alexa AI initiatives. The company asserted that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units, maintaining its commitment to creating the best personal assistant available.