Amazon’s efforts to monetize its Alexa-enabled devices have reportedly failed, leading to significant financial losses. According to the Wall Street Journal, internal documents reveal that the online retail giant incurred losses exceeding $25 billion from its Echo, Kindle, and other related devices between 2017 and 2021. Despite attracting hundreds of millions of users, the Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms and are seldom used for shopping.
A former senior Amazon employee expressed concerns about the company’s direction, indicating that the organization hired a substantial number of people but instead created a simple timer rather than enhancing its shopping capabilities.
In response to these challenges, Amazon CEO Andy Jassy is pursuing solutions, including the introduction of a paid tier for Alexa. However, some engineers working on this upgraded version are reportedly skeptical about its potential success.
An Amazon spokesperson stated that the company is concentrating on the value generated by customers utilizing its services, rather than solely focusing on device sales. They highlighted the organization’s ability to create numerous profitable business avenues and expressed confidence in continuing this trend.
In another development, reports suggest that Amazon’s new AI-powered Alexa, showcased in September, is not yet ready. Former employees noted that the company lacks sufficient data and the necessary chips for the large language model required for the new virtual assistant. Furthermore, Amazon has shifted its focus towards generative AI for its cloud computing branch, Amazon Web Services, leaving the AI-enhanced Alexa project deprioritized.
In defense of its progress, Amazon dismissed claims made by former employees, asserting they lack accurate information about its ongoing efforts in Alexa’s AI development. The company emphasized that its Artificial General Intelligence team has access to essential in-house chips and Nvidia GPUs, affirming its commitment to creating the “world’s best personal assistant.”