Amazon’s efforts to monetize its Alexa-enabled devices have reportedly not yielded positive results, leading to losses of billions for the company.
From 2017 to 2021, the online retailer suffered losses exceeding $25 billion from its Echo, Kindle, and other devices, according to a report by the Wall Street Journal, which cited internal documents and sources familiar with the situation. Despite having hundreds of millions of customers using these devices, it appears that many utilize the Alexa-enabled Echo speakers primarily for setting alarms and accessing free applications, rather than shopping on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers working on this new version are skeptical about its potential impact, as noted in the Wall Street Journal report.
An Amazon spokesperson commented, “We’re focused on the value we create when customers use our services, not just when they buy our devices. Our Devices & Services organization has launched many profitable businesses for Amazon and is well-equipped to continue doing so.”
In addition, reports indicate that Amazon’s newly demoed AI-powered Alexa, introduced in September, is not yet fully developed. According to former employees, the company lacks sufficient data and access to the necessary chips to support the advanced large language model for this updated version of its assistant. Furthermore, Amazon is said to have shifted its focus to developing generative AI within its cloud computing division, Amazon Web Services.
Amazon rebutted claims from former employees, asserting that they are misinformed regarding the company’s Alexa AI initiatives. The company stated that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units. Amazon remains committed to its objective of creating the world’s best personal assistant.