Amazon’s strategy to monetize its Alexa-enabled devices appears to be faltering, resulting in substantial financial losses for the company, according to reports. From 2017 to 2021, Amazon reportedly incurred losses exceeding $25 billion from its Echo, Kindle, and other devices, as per internal documents and sources familiar with the matter shared by the Wall Street Journal. Although Amazon has amassed hundreds of millions of customers for its devices, the Alexa-enabled Echo speakers are primarily utilized for simple tasks like setting alarms or using free apps, rather than for shopping on Amazon.
A former senior employee expressed concerns, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
Now, CEO Andy Jassy is searching for solutions, with plans to introduce a paid tier for Alexa. However, some engineers involved in developing this paid version are skeptical about its potential effectiveness, as noted by the Wall Street Journal.
An Amazon spokesperson emphasized the company’s focus on creating value for customers through its services beyond merely selling devices. The spokesperson stated that the Devices & Services organization has established several profitable ventures and is prepared to continue this trend.
In the meantime, Amazon’s new AI-powered Alexa, which was showcased in September, reportedly is not yet ready according to former employees. The company faces challenges regarding data access and the necessary chips to support the large language model powering the new assistant, as reported by Fortune. Additionally, Amazon has reportedly shifted its focus away from AI for Alexa to concentrate on generative AI for its cloud computing division, Amazon Web Services.
Amazon refuted claims from former employees, asserting that they are misinformed about the progress of its Alexa AI initiatives and confirmed that the Amazon Artificial General Intelligence team has access to in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing “the world’s best personal assistant.”