Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, resulting in the company losing billions of dollars.
From 2017 to 2021, Amazon experienced a loss exceeding $25 billion related to its Echo, Kindle, and other devices, according to the Wall Street Journal, which cited internal documents and sources familiar with the matter. Despite having hundreds of millions of customers for these devices, their primary uses revolve around setting alarms and accessing free applications, rather than driving purchases on Amazon.
“We worried we’ve hired 10,000 people and we’ve built a smart timer,” a former senior Amazon employee conveyed to the Wall Street Journal.
In response, Amazon CEO Andy Jassy is seeking solutions, with the company reportedly preparing to introduce a paid tier for its voice assistant. However, sources indicated that some engineers involved in developing this paid version of Alexa are skeptical about its potential impact.
An Amazon spokesperson stated, “We focus on the value we create when customers use our services, not just when they buy our devices.” They emphasized that Amazon’s Devices & Services organization has established various profitable businesses and is positioned to continue doing so.
On another front, the new AI-powered version of Alexa, showcased in September, reportedly remains far from completion, according to former employees. The company lacks sufficient data and access to the necessary chips to run the large language model that will power this new iteration, as indicated by Fortune. Additionally, Amazon has allegedly shifted its focus from AI-enhanced Alexa to developing generative AI for its cloud services division, Amazon Web Services.
In defense, Amazon stated that the claims made by former employees about its current Alexa AI initiatives are inaccurate. The company affirmed that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. Amazon’s commitment remains to create “the world’s best personal assistant.”