Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, leading to the company losing billions of dollars. From 2017 to 2021, Amazon lost over $25 billion on its Echo, Kindle, and other devices, according to internal documents and sources cited by the Wall Street Journal. Despite attracting hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms, rather than for shopping on Amazon.
A former senior employee expressed concern about the company’s hiring and the effectiveness of the devices, 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 seeking solutions and is reportedly planning to introduce a paid tier of its voice assistant. However, some engineers involved in the project are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Additionally, reports indicate that Amazon’s new AI-powered version of Alexa, showcased in September, is not yet prepared for release. Former employees have noted that the company lacks sufficient data and access to the necessary chips for the large language model driving the new assistant. Furthermore, Amazon is said to be prioritizing its generative AI initiatives within its cloud computing division, Amazon Web Services, over the AI-enhanced Alexa.
In response to these claims, Amazon defended its current efforts on Alexa AI, asserting that the former employees are misinformed and that the company has access to both in-house Trainium chips and Nvidia GPUs. Amazon reiterated its goal to develop “the world’s best personal assistant.”