Amazon’s strategy to monetize its Alexa-enabled devices appears to be faltering, resulting in significant financial losses for the company. Reports indicate that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, according to internal documents and sources familiar with the situation. Although the company boasts hundreds of millions of customers for its devices, the Echo speakers are primarily used for basic functions like setting alarms rather than making purchases through Amazon.
A former senior employee remarked on the mismatch between hiring efforts and the functionality of the devices, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid subscription model for its voice assistant. However, some engineers involved in the project are skeptical about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers using its services, stating that the Devices & Services division has established several profitable ventures and is well-equipped for future success.
In addition, Amazon’s newly demonstrated artificial intelligence-enhanced Alexa is reportedly far from being ready, according to former employees. They claim the company lacks sufficient data and access to the necessary chips for the large language model that powers the updated version of the assistant. Amazon is reportedly prioritizing generative AI development for its Amazon Web Services division instead of advancing AI capabilities for Alexa.
Amazon has refuted the claims from former employees, asserting that they are misinformed regarding the current state of Alexa’s AI initiatives. The company insists that its Artificial General Intelligence team has access to both in-house and Nvidia chips and remains committed to creating “the world’s best personal assistant.”