Amazon’s endeavor to monetize its Alexa-enabled devices has reportedly faltered, resulting in substantial losses for the tech giant. According to reports, the company lost over $25 billion from its Echo, Kindle, and other device offerings between 2017 and 2021, based on internal documents and information from anonymous sources.
Despite having hundreds of millions of customers using its devices, the Echo speakers equipped with Alexa are predominantly utilized for basic functions like setting alarms rather than shopping on Amazon itself. A former senior Amazon employee expressed concerns about the situation, indicating that the company had invested heavily in talent while producing a product that fell short of expectations.
In response to these challenges, Amazon CEO Andy Jassy is reportedly exploring a solution by introducing a paid tier for its voice assistant. However, some engineers within the company have expressed doubts about whether this approach will resolve the existing issues.
An Amazon spokesperson stated that the company is concentrating on the value generated when customers use its services beyond just purchasing devices. They asserted that the Devices & Services division has successfully established various profitable ventures for Amazon.
In parallel, Amazon’s newly introduced AI-powered Alexa, showcased in September, is said to be far from ready, according to former employees. They mentioned that the company lacks sufficient data and the necessary chips to support the large language model powering the upgraded virtual assistant. Furthermore, it has been reported that Amazon has deprioritized advancements in AI for Alexa to concentrate on generative AI development for its cloud computing segment, Amazon Web Services.
In response to these claims, Amazon refuted the assertions made by former employees, asserting that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing what it aims to be the world’s leading personal assistant.