Amazon’s strategy to monetize its Alexa-enabled devices is reportedly falling short, leading to significant financial losses for the company, totaling over $25 billion from 2017 to 2021, according to internal documents and sources cited by the Wall Street Journal. Despite having hundreds of millions of customers using devices like the Echo and Kindle, these devices are primarily utilized for non-shopping functions, such as setting alarms and using various free apps.
A former senior employee expressed concerns, 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 pursuing a solution, including the introduction of a paid version of Alexa. However, some engineers involved in the project are skeptical about its potential success.
An Amazon spokesperson emphasized that the company’s focus is on the value created for customers using its services rather than solely through device sales, asserting that the Devices & Services division has established several profitable ventures for Amazon.
Additionally, the company’s new AI-enhanced Alexa, showcased in September, reportedly faces readiness issues. Former employees have indicated that Amazon lacks sufficient data and the necessary technology to support the large language model required for the updated assistant. Furthermore, there are claims that Amazon has shifted its priorities towards developing generative AI for its cloud computing platform, Amazon Web Services, rather than advancing the AI features for Alexa.
In response to these criticisms, Amazon refuted the statements from former employees, asserting they are misinformed about the current capabilities of its Alexa AI initiatives. The company claimed that its Artificial General Intelligence team has access to relevant technology, including their own Trainium chips and Nvidia GPUs, and reaffirmed its commitment to creating “the world’s best personal assistant.”