Amazon’s initiative to monetize its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to billions in the last few years.
According to a report from the Wall Street Journal, internal documents and sources familiar with the situation indicate that the online retail giant has incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers using its devices, data suggests that many utilize the Alexa-enabled Echo speakers primarily for basic functions like setting alarms, rather than for shopping on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved in developing this paid version have expressed skepticism about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value provided to customers beyond merely selling devices. They noted that the Devices & Services organization has created numerous profitable avenues and is poised to continue doing so in the future.
On another front, Amazon’s new AI-enhanced version of Alexa, which was showcased in September, is allegedly far from ready, according to former employees. The company reportedly lacks sufficient data and access to the necessary chips for operating the large language model that will power the updated virtual assistant. Furthermore, there are claims that Amazon has shifted its priority away from developing AI for Alexa, instead concentrating on generative AI for its cloud computing service, Amazon Web Services.
In response to these assertions, Amazon disputed the claims made by former employees, stating that they are incorrect regarding the company’s current efforts with Alexa AI. The company maintains that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Amazon’s overarching goal for Alexa remains to create the world’s best personal assistant.