Amazon’s efforts to monetize its Alexa-enabled devices appear to have backfired significantly, resulting in losses exceeding $25 billion from 2017 to 2021, according to the Wall Street Journal. Internal documents and sources familiar with the situation reveal that despite having hundreds of millions of customers using devices like the Echo and Kindle, the primary use for Alexa-enabled speakers tends to be for basic functions such as setting alarms, rather than making purchases on Amazon.
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 this challenge, Amazon CEO Andy Jassy is reportedly working on a solution, including the introduction of a paid version of Alexa. However, sources indicate that some engineers involved in this initiative are skeptical about its potential impact.
An Amazon spokesperson emphasized that the company prioritizes the value created for customers when using its services, rather than solely focusing on device sales. They noted that the Devices & Services organization has successfully established several profitable business segments for Amazon.
In addition, reports suggest that Amazon’s newly introduced AI-enhanced Alexa, showcased in September, is not ready for deployment. Former employees claim the company lacks sufficient data and the necessary chips to support the advanced language model driving the updated assistant. Furthermore, it appears that Amazon has shifted its focus from developing AI for Alexa to enhancing generative AI capabilities in its cloud computing division, Amazon Web Services.
In defense of its efforts, Amazon has countered these claims, arguing that its former employees are misinformed about the current state of Alexa’s AI development. The company asserts that the Amazon Artificial General Intelligence team has adequate access to the required resources to achieve its goal of creating the best personal assistant in the market.