Amazon’s efforts to monetize its Alexa-enabled devices have reportedly fallen short, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, it is estimated that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of customers using its devices, the usage of Alexa-enabled Echo speakers is predominantly for basic functions like setting alarms and using free applications, rather than for shopping on Amazon. A former senior employee expressed concern about the situation, 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 and is reportedly set to introduce a paid version of its voice assistant. However, some engineers involved in the project have expressed doubts about its potential effectiveness, as reported by sources.
An Amazon spokesperson emphasized that the company prioritizes the value generated when customers utilize their services, rather than solely focusing on device sales. They noted that the Devices & Services organization has created several profitable business sectors for Amazon and is equipped to sustain this success moving forward.
In addition, Amazon’s new AI-powered Alexa, which was showcased in September, is reportedly not yet ready for launch, according to former employees. The company is said to be lacking sufficient data and the necessary chips to support the large language model that drives the updated virtual assistant. Furthermore, Amazon has allegedly shifted its focus away from AI development for Alexa to concentrate on generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon stated that former employees are misinformed regarding the current status of Alexa’s AI initiatives. They asserted that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming the company’s goal to develop the world’s best personal assistant.