Amazon’s strategy for monetizing its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company. According to internal documents and sources cited by the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers using these devices, it appears that most utilization is for basic functions such as setting alarms and accessing free applications, rather than shopping on Amazon.
A former senior employee expressed concerns about the situation, 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 seeking solutions, including the launch of a premium version of Alexa. However, there are apprehensions among engineers about the potential success of this paid version.
An Amazon spokesperson emphasized that the company prioritizes the overall value generated from its services, rather than just the sales of its devices. They noted that the Devices & Services division has already established several profitable enterprises and remains optimistic about future prospects.
On a related note, Amazon’s new AI-enhanced version of Alexa, previewed in September, is said to be far from completion. Reports indicate that the company struggles with a lack of sufficient data and the necessary chips to support the advanced language model required for the new assistant. Furthermore, there are indications that Amazon has shifted its focus toward developing generative AI technologies for its cloud service, Amazon Web Services.
In response to these claims, Amazon stated that the critiques from former employees are misguided and emphasized that its Artificial General Intelligence team has access to essential technologies, including in-house Trainium chips and Nvidia GPUs. The company affirmed its commitment to creating what it aims to be the best personal assistant in the world.