Amazon’s efforts to monetize its Alexa-enabled devices have not been as successful as anticipated, resulting in significant financial losses for the company, according to a report by the Wall Street Journal. From 2017 to 2021, Amazon lost over $25 billion on its Echo, Kindle, and other devices, based on internal documents and insights from unnamed sources.
Despite having hundreds of millions of customers, the primary uses for Amazon’s Echo speakers involve basic functions like setting alarms and accessing free apps rather than shopping on the platform. A former senior employee expressed concerns over the situation, pointing out the company’s investments in hiring personnel to develop a device that may not fulfill its intended purpose.
In response to these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid tier for the Alexa voice assistant. However, sources have indicated that some engineers are skeptical about this approach’s effectiveness in improving the situation.
An Amazon spokesperson countered concerns by emphasizing that the company focuses on creating value for customers through its services, not solely reliant on device sales. They noted that the Devices & Services division has successfully established profitable ventures and is poised to continue doing so.
On a related note, a newer version of Alexa featuring artificial intelligence capabilities is reportedly not ready yet. Former employees claim that Amazon lacks sufficient data and access to essential chips for the large language model that will power this iteration. Additionally, the company has shifted its priorities to focus on generative AI for its cloud computing segment, Amazon Web Services.
Amazon refuted these claims, stating that its Artificial General Intelligence team has access to the necessary Trainium chips and Nvidia GPUs and reiterating its commitment to developing the best personal assistant available.