Amazon’s strategy for monetizing its Alexa-enabled devices has turned out to be costly, with reports indicating the company has lost over $25 billion between 2017 and 2021 due to its Echo, Kindle, and other gadgets. Internal documents and sources familiar with the situation shared this information with the Wall Street Journal. Despite having hundreds of millions of customers, many users primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms rather than shopping on Amazon.
A former senior employee expressed concerns about the validity of Amazon’s approach, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is reportedly exploring solutions, including a potential paid subscription tier for Alexa. However, some engineers involved in the development of this paid version have expressed doubts about its efficacy.
An Amazon spokesperson indicated that the company focuses on the value delivered through its services rather than solely device sales. They claimed that the Devices & Services organization has established profitable ventures for Amazon and is well-equipped for continued success.
Additionally, an artificial intelligence-enhanced version of Alexa that Amazon showcased in September is reportedly far from completion, as former employees noted a lack of sufficient data and necessary chips to support the new large language model. Furthermore, the company has allegedly shifted its focus from AI-powered Alexa to generative AI development for its cloud services through Amazon Web Services.
In response to these claims, Amazon asserted that its former employees are misinformed regarding its AI initiatives, stating that the Amazon Artificial General Intelligence team has access to both custom Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains to develop “the world’s best personal assistant.”