Amazon’s strategy to monetize its Alexa-enabled devices is reportedly faltering, resulting in significant financial losses for the company. According to internal documents and sources cited by the Wall Street Journal, Amazon lost over $25 billion from devices such as the Echo and Kindle between 2017 and 2021. Although the tech giant boasts hundreds of millions of customers using its devices, many utilize the Alexa-enabled Echo speakers mainly for basic functions like setting alarms rather than making purchases.
A former senior employee expressed concerns about the workforce expansion and the nature of the product, 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 plans to introduce a paid version of Alexa. However, some engineers involved in the project have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value created through services used by customers, stating that the Devices & Services division has successfully established several profitable businesses and will continue to do so.
In addition, the new AI-powered version of Alexa, which was demonstrated in September, is reportedly not fully ready, according to former employees. The company struggles with insufficient data and lacks essential chips for the large language model that drives the new iteration of its virtual assistant. Additionally, there are claims that Amazon is prioritizing the development of generative AI for its cloud computing division, Amazon Web Services, over the AI-enhanced Alexa.
Amazon, however, disputes the accuracy of its former employees’ claims and insists that its Artificial General Intelligence team has the necessary resources, including in-house Trainium chips and Nvidia GPUs, to pursue its goal of creating the “world’s best personal assistant.”