Amazon’s efforts to monetize its Alexa-enabled devices have reportedly fallen short, resulting in significant financial losses for the company. According to internal documents and insiders cited by the Wall Street Journal, Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. Although the company boasts hundreds of millions of customers for its devices, the Alexa-enabled Echo speakers tend to be used more for basic tasks like setting alarms rather than for shopping.
One former senior Amazon employee expressed concerns, 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 exploring solutions, including the introduction of a paid tier for the Alexa voice assistant. However, some engineers involved in developing this premium version of Alexa are skeptical about its potential impact, according to sources.
An Amazon spokesperson shared that the company is focused on the value created when customers use its services, not solely on the sales of devices. They emphasized that the Devices & Services organization has established profitable ventures and is positioned to continue doing so.
In addition, reports indicate that Amazon’s new AI-enhanced Alexa, recently showcased in September, is facing delays. Former employees mentioned that the company lacks sufficient data and access to the necessary chips for its large language model (LLM). Furthermore, Amazon has allegedly shifted its focus to generative AI for its cloud computing division, Amazon Web Services, rather than prioritizing the development of the AI-powered Alexa.
In response to these allegations, Amazon stated that former employees are misinformed about the company’s current AI initiatives and noted that its Amazon Artificial General Intelligence team has access to proprietary chips and Nvidia GPUs. The company’s ongoing objective for Alexa remains to develop the best personal assistant in the world.