Amazon’s strategy to monetize its Alexa-enabled devices has reportedly resulted in significant financial losses for the company, with estimates suggesting a loss of over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, according to internal documents and sources familiar with the situation. Despite having hundreds of millions of users for its devices, Amazon’s Echo speakers are primarily used for basic functions like setting alarms, rather than for shopping purposes.
A former senior Amazon employee expressed concerns about the company’s investments, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon CEO Andy Jassy is seeking solutions and is set to introduce a paid subscription tier for its voice assistant. However, some engineers reportedly doubt the potential impact of this change.
An Amazon spokesperson emphasized that the company focuses on the value generated when customers utilize its services, stating that its Devices & Services organization has created several profitable ventures and is well-positioned for future success.
In addition, Amazon’s updated AI-driven Alexa, showcased in September, is said to be far from ready, with former employees noting a lack of necessary data and access to the required hardware for its advanced language model. The company has reportedly shifted its focus towards developing generative AI for its cloud services, Amazon Web Services, rather than prioritizing AI for Alexa.
Amazon has refuted claims made by former employees, asserting that they are misinformed about the capabilities of its Alexa AI initiatives and that its Artificial General Intelligence team has access to essential chips for development. The company remains committed to its vision of creating the best personal assistant in the world.