Amazon’s initiative to monetize its Alexa-enabled devices is reportedly falling short, leading to substantial financial losses for the company. According to internal documents and sources familiar with the situation, Amazon lost over $25 billion between 2017 and 2021 from its Echo, Kindle, and other devices. Despite having hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms and accessing free apps, rather than for making purchases on Amazon.
A former senior Amazon employee expressed concern, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the challenges, Amazon CEO Andy Jassy is seeking solutions and is reportedly introducing a paid tier for the voice assistant. However, some engineers involved in developing the paid version of Alexa are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on creating value from its services, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In addition, Amazon’s new AI-enhanced version of Alexa, unveiled in September, is said to be far from ready. Former employees have noted that the company lacks sufficient data and access to the necessary chips for the large language model driving the upgraded virtual assistant. Furthermore, Amazon has reportedly shifted its attention away from AI-enhanced Alexa to prioritize generative AI development within its cloud computing division, Amazon Web Services.
Amazon has countered claims made by its former employees, stating they are incorrect and uninformed regarding the company’s current Alexa AI initiatives. The company asserted that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Amazon remains committed to its objective of building “the world’s best personal assistant.”