Amazon’s efforts to monetize its Alexa-enabled devices seem to have backfired, with the company reportedly losing over $25 billion between 2017 and 2021 from its Echo, Kindle, and other devices, according to a report by the Wall Street Journal that references internal documents and anonymous sources. Although Amazon boasts hundreds of millions of customers using these devices, the primary use of the Alexa-enabled Echo speakers has been for basic functions like setting alarms, rather than shopping on Amazon.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers involved in this project have expressed skepticism about its potential effectiveness.
An Amazon spokesperson defended the company’s strategy, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.” They emphasized that the focus is on creating value from customer usage of services rather than solely from device sales.
Additionally, reports indicate that Amazon’s latest AI-powered Alexa, showcased in September, is not yet fully developed. Sources suggest that the company lacks sufficient data and access to the necessary technology to deploy the large language model (LLM) that would enhance the updated assistant. There are also claims that Amazon has shifted its priorities toward generative AI for its cloud computing sector, Amazon Web Services.
Amazon countered these assertions, arguing that former employees are misinformed about ongoing AI developments. They stated that the Amazon Artificial General Intelligence team has adequate access to both in-house chips and Nvidia GPUs, reaffirming their commitment to making Alexa the world’s leading personal assistant.