Amazon’s strategy to monetize its Alexa-enabled devices has not been successful, leading to significant financial losses for the company. Internal documents and insights from unnamed sources reveal that from 2017 to 2021, Amazon incurred more than $25 billion in losses related to its Echo, Kindle, and other devices, as reported by the Wall Street Journal. While the company boasts hundreds of millions of device users, most interactions with Alexa-enabled Echo speakers revolve around setting alarms and utilizing free applications, rather than facilitating shopping on Amazon.
A former senior Amazon employee noted concerns within the company, 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 exploring solutions, including the launch of a paid tier for its voice assistant. However, some engineers involved in this initiative express doubts about its potential effectiveness.
An Amazon spokesperson countered, emphasizing that the company prioritizes the value generated from its services beyond mere device sales. They asserted that the Devices & Services division has successfully established multiple profitable ventures for Amazon and is well-prepared for future growth.
Furthermore, the rollout of a new AI-enhanced version of Alexa, which was showcased in September, reportedly faces considerable hurdles. Former employees have indicated that the technology is far from ready, citing inadequate data and a lack of access to necessary chips for operating the large language model driving the upgrade. Additionally, Amazon is apparently shifting focus toward generative AI for its cloud services division, Amazon Web Services, leading to a deprioritization of the AI-powered Alexa project.
Amazon has refuted claims made by former employees, asserting that they are misinformed regarding the company’s current AI initiatives for Alexa. They emphasized that the Amazon Artificial General Intelligence team has access to the required Trainium chips and Nvidia GPUs, and reiterated their goal of developing “the world’s best personal assistant.”