Amazon’s efforts to monetize its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the matter, the online retail giant lost more than $25 billion on its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of customers, many users primarily use Alexa-enabled Echo speakers for functions like setting alarms and accessing free applications, rather than for shopping on Amazon. A former senior employee expressed concern, noting, “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 paid version of Alexa. However, sources have indicated that some Amazon engineers involved in the development of this paid version are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s intention to focus on the value created by the use of its services rather than just device sales. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so,” the spokesperson stated.
Additionally, a new AI-powered version of Alexa, which was showcased in September, is reportedly still not ready for deployment, according to former employees. They mentioned that Amazon lacks sufficient data and access to the necessary chips to support the large language model driving the new assistant. Furthermore, Amazon is said to have shifted its focus towards developing generative AI capabilities for its cloud computing platform, Amazon Web Services.
In response to these criticisms, Amazon disputed the accuracy of its former employees’ claims, asserting that its Artificial General Intelligence team has the necessary resources, including both in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to creating “the world’s best personal assistant.”