Amazon’s strategy to monetize its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company, totaling over $25 billion between 2017 and 2021, according to the Wall Street Journal, which reviewed internal documents and spoke with sources close to the matter. Despite Amazon having a vast customer base for its devices, users primarily engage with the Alexa-enabled Echo speakers for simple tasks such as setting alarms and accessing free applications, rather than making purchases.
A former senior employee voiced concerns about the company’s direction, highlighting the disparity between the resources invested—such as hiring 10,000 staff—and the actual capabilities delivered, likening the situation to merely building a smart timer.
Currently, Amazon CEO Andy Jassy is exploring solutions, with plans to introduce a paid tier for its voice assistant. Nevertheless, some engineers involved in developing this paid version doubt its efficacy in altering customer behavior.
An Amazon spokesperson defended the company’s approach, stating that the focus is on the value provided to customers through its services and not solely on device sales. They emphasized that Amazon’s Devices & Services division has successfully created several profitable ventures and is poised to continue this trend.
In related developments, Amazon’s anticipated AI-enhanced Alexa, showcased in September, is reportedly far from completion. Former employees have raised concerns about insufficient data and a lack of access to necessary chips for operating the large language model behind the upgraded assistant. Additionally, Amazon appears to be prioritizing its generative AI projects within its cloud computing division, Amazon Web Services, over the new Alexa initiative.
In response to these criticisms, Amazon disputed the claims made by former employees, asserting that its Amazon Artificial General Intelligence team has appropriate access to the required Trainium chips and Nvidia GPUs. The company’s overarching goal for Alexa remains to create the leading personal assistant in the market.