Amazon’s efforts to monetize its Alexa-enabled devices have reportedly resulted in significant financial losses for the company, amounting to over $25 billion between 2017 and 2021. According to the Wall Street Journal, internal documents and sources close to the situation reveal that despite attracting hundreds of millions of users to its Echo, Kindle, and other devices, many customers predominantly use the Alexa-enabled Echo speakers for basic functions such as setting alarms, rather than for making purchases on Amazon.
A former senior employee remarked, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” highlighting concerns about the lack of profitable engagement from these devices. As a response to the financial shortfall, Amazon’s CEO Andy Jassy is reportedly exploring the introduction of a paid tier for Alexa. However, some engineers within the company express skepticism, fearing that this initiative may not yield the desired impact.
An Amazon spokesperson emphasized that the company is dedicated to creating value through its services, beyond just device sales, and mentioned that the Devices & Services division has established several profitable ventures for Amazon.
In tandem with these developments, Amazon unveiled a new AI-enhanced version of Alexa in September. However, former employees expressed doubts about its readiness, citing insufficiencies in the data and access to the necessary chips for running the advanced language model. Furthermore, it has been reported that Amazon is shifting focus towards generative AI development within its cloud computing arm, Amazon Web Services, rather than prioritizing the AI-powered Alexa project.
In response to these claims, Amazon maintains that its previous employees are misinformed regarding the current state of Alexa AI initiatives, asserting that the Amazon Artificial General Intelligence team has the resources needed, including proprietary Trainium chips and Nvidia graphics processing units. The company reiterated its commitment to developing “the world’s best personal assistant” with Alexa.