Amazon’s strategy to monetize its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to the Wall Street Journal, internal documents reveal that from 2017 to 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and various other devices. Despite having hundreds of millions of customers for these devices, usage statistics indicate that many customers primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms, rather than for making purchases on Amazon.
A former senior employee expressed concern over the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid version have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company focuses on the value created when customers use their services, not solely on device sales. They stated that the Devices & Services organization has successfully established various profitable ventures and is well-positioned for future success.
In addition, the newly unveiled AI-powered version of Alexa, demonstrated in September, is reportedly not yet ready for release, according to former employees. They claim that Amazon lacks sufficient data and access to the necessary hardware, such as chips for running the large language model that underlies the new iteration of Alexa. Furthermore, Amazon has seemingly shifted its priorities, emphasizing the development of generative AI for its cloud computing division, Amazon Web Services.
In response to these assertions, Amazon has countered that former employees are misinformed about the current status of Alexa AI initiatives. The company insists that its Artificial General Intelligence team has access to adequate resources, including in-house Trainium chips and Nvidia GPUs, and remains committed to its goal of creating the best personal assistant technology available.