Amazon’s strategy to monetize its Alexa-enabled devices appears to have faltered, reportedly costing the company billions. According to internal documents and sources familiar with the situation, the online retail giant lost over $25 billion on its Echo, Kindle, and other devices from 2017 to 2021.
Despite serving hundreds of millions of customers with its devices, it seems that Amazon’s Echo speakers are mostly utilized for setting alarms and using free applications rather than facilitating purchases on their platform. A former senior employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In light of these losses, Amazon CEO Andy Jassy is seeking solutions and is considering the introduction of a paid tier for its voice assistant. However, some engineers working on this paid version of Alexa are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value created for customers using its services, highlighting that the Devices & Services organization has generated several profitable businesses and is well-prepared to continue this trajectory.
Additionally, reports indicate that the new AI-powered Alexa unveiled by Amazon in September is far from ready, mainly due to insufficient data and a lack of access to the necessary chips for the large language model. Former employees noted that Amazon has shifted its focus toward enhancing generative AI for its cloud computing branch, Amazon Web Services.
Amazon refuted claims from former employees, asserting that they are misinformed about the current state of Alexa’s AI development. The company clarified that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, maintaining that its objective remains to develop the best personal assistant globally.