Amazon’s strategy to monetize its Alexa-enabled devices has reportedly faltered, leading to losses amounting to over $25 billion from 2017 to 2021, according to internal documents and sources cited by the Wall Street Journal. Despite boasting hundreds of millions of users, the Echo speakers are primarily employed for basic tasks like setting alarms and using free applications, rather than driving sales on Amazon.
Concerns have arisen within the company regarding the effectiveness of its workforce, with one former senior employee commenting on the unexpected lack of revenue generation from their significant investments in personnel and technology.
In response, CEO Andy Jassy is seeking solutions and is rumored to be introducing a subscription service for Alexa. However, insiders have expressed skepticism about whether this new paid version will yield any significant change.
An Amazon representative affirmed the company’s commitment to creating value for customers that extends beyond device purchases, highlighting the numerous profitable ventures established by their Devices & Services division.
In terms of innovation, Amazon’s upcoming AI-enhanced version of Alexa, showcased in September, faces significant developmental hurdles. Former employees have indicated that the necessary data and technology for the large language model that powers the new assistant are currently insufficient. Reports suggest that Amazon has shifted its focus towards generative AI applications for Amazon Web Services instead.
Amazon has contested these claims, asserting that its team has adequate resources, including their proprietary Trainium chips and Nvidia GPUs, to support their AI ambitions. The company remains steadfast in its goal to develop what it describes as the world’s leading personal assistant.