Amazon’s strategy to monetize its Alexa-enabled devices has reportedly failed, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers, users primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms and accessing free applications, rather than for making purchases on Amazon.
A former senior employee expressed concern, commenting, “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 reportedly exploring solutions and may launch a paid subscription tier for its voice assistant. However, some engineers involved in the development of this paid version of Alexa have expressed skepticism about its potential impact.
An Amazon spokesperson stated, “We are focused on the value we create when customers use our services, not just when they buy our devices.” They highlighted that the Devices & Services division has established several profitable businesses and remains positioned for future success.
Additionally, the company’s newly introduced AI-powered version of Alexa, showcased in September, is said to be far from completion. Former employees indicated that Amazon lacks sufficient data and access to the necessary chips to operate the large language model for this upgraded virtual assistant. Furthermore, Amazon is reportedly prioritizing the development of generative AI for its cloud computing service, Amazon Web Services, over perfecting the AI-powered Alexa.
In response to these claims, Amazon dismissed the assertions from former employees as inaccurate, stating that its Artificial General Intelligence team has access to the requisite Trainium chips and Nvidia GPUs. The company reiterated its commitment to building “the world’s best personal assistant” through Alexa.