Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon claims to have hundreds of millions of customers using its devices, data indicates that Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms and using free applications rather than facilitating purchases on Amazon.
A former senior Amazon employee remarked on the situation, expressing concern over the hiring of thousands of staff to develop products that might not yield substantial returns. In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, there are doubts among engineers about the effectiveness of this initiative.
An Amazon spokesperson emphasized that the company prioritizes the value created for customers using its services beyond just device sales. They noted that the Devices & Services organization has successfully established several profitable ventures for Amazon and is positioned for future success.
At the same time, reports indicate that Amazon’s new artificial intelligence-enhanced Alexa, which was showcased in September, is not yet ready for deployment. Concerns have been raised regarding the company’s access to sufficient data and the necessary computational power to operate the large language model that drives the new version of its virtual assistant. Additionally, Amazon has reportedly shifted its focus toward generative AI for its cloud computing division, Amazon Web Services, rather than advancing the AI capabilities of Alexa.
Amazon refuted claims made by former employees, asserting that they are misinformed about the current state of Alexa’s AI development. The company stated that its Artificial General Intelligence team has access to advanced in-house chips and Nvidia graphics processing units, reaffirming its commitment to building the best personal assistant available.