Amazon’s strategy to monetize its Alexa-enabled devices appears to be failing, resulting in significant financial losses for the company—over $25 billion from its Echo, Kindle, and other products between 2017 and 2021, according to internal documents and sources cited by the Wall Street Journal. Despite boasting hundreds of millions of users, it seems that many customers primarily utilize the Echo speakers for basic functions like setting alarms rather than making purchases on Amazon.
A former senior employee expressed concerns about the company’s approach, noting that many resources have been invested into features that don’t generate revenue. In light of this, CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of Alexa. However, some engineers remain skeptical about the potential effectiveness of this initiative.
An Amazon spokesperson emphasized that the company is dedicated to creating value for customers beyond just device sales and highlighted the successful profitable ventures of its Devices & Services division.
In parallel, Amazon’s new AI-enhanced version of Alexa, showcased in September, is claimed to be far from ready, as former employees reveal the company lacks sufficient data and necessary chips for the large language model driving the updated assistant. Reports indicate that Amazon has shifted priority to developing generative AI for its cloud computing division, Amazon Web Services.
In response to these criticisms, Amazon refuted claims from past employees, asserting that its Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia GPUs, and reaffirmed its goal to create the premier personal assistant.