Amazon’s strategy to monetize its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company, estimated at over $25 billion between 2017 and 2021. Internal documents and sources familiar with the situation indicated that although Amazon boasts hundreds of millions of customers using devices like the Echo and Kindle, these products are primarily utilized for basic functions such as setting alarms and accessing free applications, rather than facilitating purchases through Amazon.
A former senior employee at Amazon 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 pursuing solutions, including the introduction of a paid version of Alexa. However, there are concerns among team members about the potential effectiveness of this move.
An Amazon spokesperson highlighted the company’s focus on creating value through its services, rather than solely through device sales. They emphasized that the Devices & Services division has established several profitable ventures and is positioned for continued success.
On another front, Amazon’s new AI-powered version of Alexa, showcased in September, is reportedly facing delays due to insufficient data and a lack of access to necessary computing chips for the language model that will drive the assistant. Internal sources claim the company has shifted its focus away from enhancing Alexa to concentrate on developing generative AI for Amazon Web Services.
In response to criticisms from former employees, Amazon stated that these comments were incorrect and that the Amazon Artificial General Intelligence team has access to the required hardware. The company’s overarching goal for Alexa remains to create the premier personal assistant in the market.