Amazon’s strategy to monetize its Alexa-enabled devices has reportedly been unsuccessful, leading to significant financial losses for the company. According to the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Despite Amazon’s extensive customer base, the Echo speakers are primarily used for functions like setting alarms rather than for shopping.
A former senior employee expressed concerns about the company’s focus, 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, including the introduction of a paid tier for its Alexa voice assistant. However, some engineers fear that this paid version may not yield the desired results.
An Amazon spokesperson emphasized the company’s focus on creating value for customers beyond just device sales. They noted that the Devices & Services division has established various profitable initiatives and is positioned to continue this trend.
In the meantime, Amazon’s new AI-powered Alexa, showcased in September, is reportedly not fully developed. Former employees indicated that the company lacks sufficient data and access to the necessary chips for the new version’s large language model. Additionally, Amazon has shifted its priority toward generative AI developments for its cloud computing service, Amazon Web Services.
Amazon responded to these claims, asserting that the concerns raised by former employees are incorrect. The company maintains that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. Amazon reiterated its commitment to building “the world’s best personal assistant” with the Alexa initiative.