Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the matter, the online retail giant lost over $25 billion between 2017 and 2021 on its Echo, Kindle, and other devices, as highlighted by the Wall Street Journal.
Despite boasting hundreds of millions of device users, feedback suggests that Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms rather than for shopping on Amazon. A former senior Amazon employee reflected on this, expressing their concerns over the extensive investment in personnel while the product functionality seemed limited.
In response to the situation, Amazon CEO Andy Jassy is exploring solutions, including the launch of a paid tier for Alexa. However, some engineers involved in this initiative have expressed doubts about its potential impact.
An Amazon spokesperson reiterated the company’s focus on the value generated through customer interactions with its services, not just device sales. They noted that the Devices & Services division has successfully established profitable ventures and is poised to continue on this path.
Additionally, the new AI-powered version of Alexa, showcased in September, is reportedly not yet operational, according to former staff. Issues such as insufficient data and limited access to necessary processing chips have hindered progress, leading to a shift in focus towards generative AI in Amazon Web Services instead.
In response to criticism, Amazon stated that the opinions of former employees are inaccurate regarding the Alexa AI developments. The company affirmed that its efforts remain centered on creating an exceptional personal assistant powered by advanced technology.