Amazon’s efforts to monetize its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to an internal report and sources familiar with the situation, Amazon lost over $25 billion between 2017 and 2021 from products such as Echo and Kindle.
Despite having a customer base of hundreds of millions, users of Echo speakers primarily utilize them for basic functions like setting alarms and using free applications, rather than making purchases through Amazon. A former senior Amazon employee expressed concerns over the hiring of thousands of people to create a device that does not fulfill its intended purpose.
In response to these challenges, CEO Andy Jassy is seeking a solution, and Amazon is planning to introduce a paid version of its voice assistant. However, some engineers are skeptical about the potential success of this approach.
An Amazon spokesperson highlighted the importance of the value created through customer interaction with their services, rather than just device sales. The company’s Devices & Services division has reportedly launched several profitable ventures and aims to continue this trend.
On another note, the latest version of Amazon’s AI-enhanced Alexa, showcased in September, appears to be behind schedule, with former employees noting a lack of necessary data and technology to support the new model. Amazon is reportedly shifting focus towards developing generative AI for its cloud computing service, Amazon Web Services, which could delay progress on the updates for Alexa.
In response to these claims, Amazon stated that criticisms from former employees about the current state of Alexa’s AI capabilities are unfounded, asserting that the Amazon Artificial General Intelligence team has access to the required technology to advance their goals. The company’s vision for Alexa remains focused on establishing the leading personal assistant in the market.