Amazon’s strategy to monetize its Alexa-enabled devices has not yielded the expected financial returns, resulting in substantial losses for the company. According to a report from the Wall Street Journal, internal documents indicate that Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite attracting hundreds of millions of customers, many users primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms, rather than for shopping on Amazon.
A former senior employee expressed concern about the effectiveness of the workforce expansion, 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 reportedly exploring solutions, including the introduction of a paid subscription model for Alexa. However, some engineers involved in the development of this paid version are skeptical about its potential to drive revenue.
An Amazon spokesperson emphasized the company’s focus on the value created through its services rather than just device sales, asserting that their Devices & Services division has established multiple profitable ventures and is well-positioned for future success.
In addition, Amazon’s new AI-powered version of Alexa, showcased in September, is reportedly still far from completion. Former employees claim that the company lacks sufficient data and access to the necessary technology to support the large language model driving the upgraded assistant. Instead, Amazon has shifted its focus towards developing generative AI for its cloud computing arm, Amazon Web Services.
In response to these claims, Amazon asserted that former employees’ views are misleading and inaccurate regarding its Alexa AI developments, noting that the Amazon Artificial General Intelligence team has access to essential resources like in-house Trainium chips and Nvidia GPUs. The company remains committed to its goal of creating “the world’s best personal assistant.”