Amazon’s strategy to monetize its Alexa-enabled devices has struggled significantly, leading to substantial financial losses for the company. Reports indicate that between 2017 and 2021, Amazon lost over $25 billion on its devices, including the Echo and Kindle, according to internal documents and sources familiar with the situation.
Despite Amazon boasting hundreds of millions of customers for its devices, users primarily utilize Alexa-enabled Echo speakers for simple tasks like setting alarms and accessing free applications, rather than shopping on Amazon. A former senior employee highlighted concerns about the company’s labor investment, stating, “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 launching a paid version of the voice assistant. However, some engineers involved in the development express skepticism about its potential impact.
An Amazon spokesperson emphasized the company’s focus on customer value rather than solely device sales, asserting that the Devices & Services sector has built multiple profitable businesses and is well-positioned for the future.
On another front, Amazon’s new AI-powered version of Alexa, showcased in September, is said to be far from ready, according to former employees. The company reportedly lacks sufficient data and access to the necessary chips for the advanced language model driving the assistant’s new capabilities. Additionally, Amazon has shifted its focus towards generative AI developments for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon defended its current efforts regarding Alexa AI, stating that its Artificial General Intelligence team has access to necessary in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to creating “the world’s best personal assistant.”