Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded the expected results, reportedly costing the company over $25 billion between 2017 and 2021. According to internal documents and sources familiar with the situation, the losses stem primarily from products like Echo and Kindle, as users tend to utilize these devices more for free functions like setting alarms rather than for shopping through Amazon.
A former senior Amazon employee expressed concerns about the company’s workforce, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” hinting at a disconnect between investment and customer usage.
In response to these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers are skeptical, believing that it may not significantly change the device’s performance or revenue generation.
An Amazon spokesperson emphasized their focus on the value created through customer engagement with their services, not just device sales. They noted that the Devices & Services organization has successfully established profitable businesses and is poised to continue doing so.
Additionally, reports indicate that Amazon’s new AI-powered Alexa is not yet ready for launch due to insufficient data and lack of access to necessary technology. Internal sources suggest that the company has shifted its focus to developing generative AI for its cloud computing segment, Amazon Web Services. In contrast, Amazon has countered these claims, asserting that its efforts in Alexa AI are robust and that the team has access to essential resources for development, including in-house chips and Nvidia GPUs. The company’s goal remains to create the world’s best personal assistant.