Amazon’s strategy of monetizing its Alexa-enabled devices has fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021.
Despite boasting hundreds of millions of customers, usage patterns indicate that many Alexa-enabled Echo speakers are primarily utilized for simple tasks like setting alarms rather than facilitating shopping on Amazon. A former senior employee expressed concerns over the hiring of thousands of staff for what may seem like limited functionality.
In response to these challenges, CEO Andy Jassy is exploring solutions, including the introduction of a paid version of the voice assistant. However, some engineers involved in this initiative are skeptical about its impact on the company’s bottom line.
An Amazon spokesperson emphasized the focus on the value created through services, rather than just device sales, highlighting that the Devices & Services division has cultivated several profitable enterprises.
In addition, the development of a new AI-powered version of Alexa has reportedly encountered setbacks, with former employees stating that the assistant is not ready for launch due to insufficient data and lack of access to necessary technology. The company has also redirected efforts toward generative AI for its Amazon Web Services division.
In response to these claims, Amazon contends that its former employees are misinformed regarding the AI capabilities and resources accessible to its Artificial General Intelligence team, asserting that the goal remains to construct the best personal assistant available.