Amazon’s strategy to monetize its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company. Between 2017 and 2021, Amazon is said to have lost over $25 billion from its products, including the Echo and Kindle, according to the Wall Street Journal, which cited internal documents and sources familiar with the situation. Despite having hundreds of millions of customers, the primary use of Alexa-enabled Echo speakers appears to be for setting alarms and utilizing free applications, rather than making purchases on Amazon.
A former senior Amazon employee expressed concern, 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 reportedly seeking solutions, including the launch of a paid version of its voice assistant. However, some engineers involved in the development of this paid tier have expressed skepticism about its potential impact, according to the Wall Street Journal.
An Amazon spokesperson emphasized that the company focuses on the value created when customers use its services, beyond just device sales. They noted that the Devices & Services division has established several profitable operations and is positioned for continued success.
Additionally, Amazon’s new AI-powered Alexa, recently showcased in September, is reportedly not yet fully ready. According to former employees, the company lacks sufficient data and the necessary chips to support the advanced large language model (LLM) that the updated assistant requires. Moreover, Amazon is said to have shifted its focus to developing generative AI for its cloud computing division, Amazon Web Services.
In rebuttal, Amazon has stated that the claims made by former employees are inaccurate and that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s goal for Alexa remains clear: to create the world’s best personal assistant.