Amazon’s strategy to monetize its Alexa-enabled devices appears to have fallen short, with reports indicating that the company lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. This information comes from internal documents and sources familiar with the situation, as reported by the Wall Street Journal. Although Amazon boasts hundreds of millions of customers for its devices, it seems that users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms and accessing free applications rather than for shopping on Amazon.
Concerns about the effectiveness of the investment in these devices have emerged. A former senior employee mentioned the challenges faced by the company, 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 created when customers utilize its services, rather than solely on device sales. They noted that the Devices & Services division has created several profitable ventures for Amazon and is well-positioned for future success.
In addition, an updated AI-powered version of Alexa, showcased in September, is said to be far from ready, according to former employees. The company reportedly lacks sufficient data and access to the necessary chips to support the new large language model (LLM). Furthermore, Amazon has prioritized its generative AI initiatives for Amazon Web Services over the AI improvements for Alexa.
Amazon has countered claims made by former employees, asserting that they are misinformed about current Alexa AI advancements. The company stated that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, maintaining its aim to develop “the world’s best personal assistant.”