Amazon’s strategy to monetize its Alexa-enabled devices has reportedly backfired, resulting in the company losing billions. According to internal documents and sources familiar with the issue, the online retail giant incurred losses exceeding $25 billion on devices such as the Echo and Kindle between 2017 and 2021.
Despite having hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for setting alarms and other free applications rather than driving sales on Amazon. A former senior employee expressed concerns about the company’s investments, noting the extensive hiring without achieving significant results.
In response to these challenges, Amazon CEO Andy Jassy is reportedly exploring a paid tier for its voice assistant. Nonetheless, engineers working on this upgraded version of Alexa have voiced skepticism about its potential success.
In a statement, an Amazon spokesperson emphasized the company’s commitment to the value created from its services, rather than solely focusing on device sales. The spokesperson highlighted that the Devices & Services division has developed several profitable ventures and is well-positioned for future growth.
Additionally, reports indicate that Amazon’s new AI-integrated Alexa, showcased in September, is not yet ready for launch. Former employees noted a lack of sufficient data and the necessary technology to support the advanced language model intended for the revamped assistant. The company has reportedly shifted its focus towards generative AI for its cloud computing division, Amazon Web Services, impacting the development of the AI-enabled Alexa.
Amazon countered claims made by former employees, asserting that they are misinformed regarding the current AI initiatives. The company stated that its Artificial General Intelligence team has access to necessary technologies and is committed to developing the best personal assistant available.