Amazon’s strategy to generate revenue from its Alexa-enabled devices appears to have fallen short, leading to losses estimated at over $25 billion from 2017 to 2021, according to a report by the Wall Street Journal, which references internal documents and sources familiar with the situation. Despite having a vast customer base for its devices, the Echo speakers with Alexa are primarily used for basic functions like setting alarms rather than for making purchases on Amazon.
A former senior Amazon employee expressed concerns about the investment in creating devices that primarily function as smart timers rather than profitable products. In response, Amazon CEO Andy Jassy is reportedly exploring the launch of a paid tier for the voice assistant, although some engineers fear that this change might not significantly impact the situation.
An Amazon representative stated that the company prioritizes the value generated when customers utilize their services instead of merely focusing on device sales. They noted that the Devices & Services division has created various profitable ventures and is positioned for continued success.
Additionally, Amazon’s forthcoming AI-enhanced version of Alexa, previewed in September, is reportedly facing significant challenges. Former employees indicated that the necessary data and hardware to support the advanced language model are inadequate. The company has shifted priorities to emphasize generative AI development for its cloud service, Amazon Web Services.
In response, Amazon disputed claims from former employees, asserting that its Artificial General Intelligence team has access to in-house chips and Nvidia GPUs. The company reiterated its commitment to developing the premier personal assistant in the market.