Amazon’s efforts to monetize its Alexa-enabled devices have not yielded the expected financial returns and are reportedly resulting in significant losses for the company. According to a report from the Wall Street Journal, Amazon incurred over $25 billion in losses related to its Echo, Kindle, and other devices from 2017 to 2021, based on internal documents and sources familiar with the situation.
Despite Amazon having hundreds of millions of customers for its devices, reports indicate that many users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms and using free apps, rather than for making purchases on Amazon itself.
A former senior employee expressed concerns, stating, “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 seeking solutions, with plans to introduce a paid version of its voice assistant. However, some engineers working on this initiative have reservations about its potential impact on the company’s fortunes.
An Amazon spokesperson defended the company’s approach, asserting, “We’re focused on the value we create when customers use our services, not just when they buy our devices.” They noted that the Devices & Services organization has achieved several profitable ventures for Amazon and is well-positioned for future success.
At the same time, the new AI-infused version of Alexa that Amazon showcased in September is reportedly still in the developmental phase. Former employees claim that the company lacks adequate data and access to the necessary chips for operating the large language model for this upgraded assistant. Additionally, Amazon is said to be prioritizing the development of generative AI within its cloud computing sector, Amazon Web Services, over enhancing Alexa.
In response to these criticisms, Amazon contends that the former employees are misinformed regarding the state of its Alexa AI advancements. The company asserts that its Amazon Artificial General Intelligence team has access to in-house Trainium chips and Nvidia GPUs and remains committed to developing what it aims to make the world’s best personal assistant.