Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to internal documents and sources cited by the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, it appears that the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms rather than for making purchases.
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 reportedly seeking solutions and is considering launching a subscription service for its voice assistant. However, there are concerns among some engineers working on the project that this move may not yield significant improvements.
An Amazon spokesperson affirmed the company’s commitment to creating value through its services rather than solely focusing on device sales. The spokesperson also noted that the Devices & Services division has established several profitable ventures for Amazon and is positioned for future growth.
In addition, reports indicate that Amazon’s upcoming AI-powered version of Alexa, showcased in September, is far from ready. Former employees have stated that the company lacks sufficient data and access to the necessary chips for operating the large language model (LLM) driving the new assistant. Furthermore, Amazon is said to have deprioritized the AI-enhanced Alexa in favor of developing generative AI for its cloud computing arm, Amazon Web Services.
Amazon has pushed back against claims from former employees, asserting that they are misinformed regarding the current state of its Alexa AI initiatives. The company emphasized that its Artificial General Intelligence team has access to in-house Trainium chips and Nvidia GPUs. Amazon’s goal remains to develop the “world’s best personal assistant.”