Amazon’s strategy to monetize its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021, according to internal documents and sources familiar with the matter, as reported by the Wall Street Journal. Although the company has a vast customer base using devices like the Echo and Kindle, data suggests that users primarily utilize these devices for basic functions such as setting alarms rather than making purchases.
A former senior Amazon employee expressed concern, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these setbacks, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of Alexa. However, some engineers within the company have expressed skepticism about the potential impact of this paid service.
An Amazon spokesperson commented, “We are focused on the value we create when customers use our services, not just when they buy our devices,” emphasizing the company’s success in establishing various profitable ventures within its Devices & Services organization.
Additionally, the new AI-enhanced version of Alexa, which was showcased in September, is reportedly not as close to completion as anticipated. Former employees indicated that Amazon lacks sufficient data and access to the necessary hardware to support the large language model for this advanced assistant. The company is said to have shifted its priorities towards developing generative AI for its cloud computing arm, Amazon Web Services.
Amazon has refuted claims from former employees, asserting that they are misinformed regarding Alexa’s AI capabilities. The company maintains that its Artificial General Intelligence team is equipped with both in-house Trainium chips and Nvidia GPUs, reiterating its commitment to creating “the world’s best personal assistant.”