Amazon’s efforts to monetize its Alexa-enabled devices have reportedly backfired, resulting in substantial losses for the company. According to internal documents and sources familiar with the situation, Amazon lost over $25 billion between 2017 and 2021 on products like the Echo and Kindle. Although the online retail giant boasts hundreds of millions of customers for these devices, most usage appears to be limited to setting alarms and accessing free apps rather than facilitating purchases from Amazon.
A former senior Amazon employee remarked on the company’s overreliance on efforts that didn’t yield expected results, quipping about hiring thousands but producing merely a “smart timer.”
In response to the financial setbacks, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers involved in developing this version express skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value through the services associated with its devices, highlighting that the Devices & Services division has cultivated profitable ventures that are expected to grow.
In a further challenge, Amazon’s recently showcased AI-enhanced Alexa appears to be far from complete, with former employees claiming that the company lacks adequate data and necessary chips to support the advanced language model. Reports indicate that Amazon has shifted focus to prioritize generative AI development within its cloud services division, Amazon Web Services.
Amazon disputes the claims made by former employees, asserting that the team responsible for Alexa’s artificial intelligence has access to both proprietary Trainium chips and Nvidia GPUs. The company’s commitment to developing “the world’s best personal assistant” for Alexa continues unchanged.