Amazon’s efforts to monetize its Alexa-enabled devices appear to have faltered, reportedly costing the company billions.
Between 2017 and 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices, according to a report from the Wall Street Journal, which cited internal documents and sources close to the situation. Although Amazon boasts hundreds of millions of customers for its devices, its Echo speakers, equipped with Alexa, are primarily used for basic functions like setting alarms and utilizing free applications, rather than facilitating shopping on the Amazon platform.
A former senior Amazon employee expressed concerns about the company’s hiring practices and device functionality, 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 seeking solutions, which reportedly includes the introduction of a paid subscription for its voice assistant. However, engineers working on this new version of Alexa have expressed doubts about its potential effectiveness, as reported by the Wall Street Journal.
An Amazon spokesperson emphasized the company’s commitment to creating value beyond device sales, stating that the Devices & Services division has established several profitable ventures and is positioned for continued success.
Additionally, Amazon showcased its new AI-powered version of Alexa in September; however, former employees claim it is far from being operational. They noted that the company is lacking sufficient data and access to the necessary chips to run the large language model (LLM) that drives this new assistant. Furthermore, there are reports that Amazon is prioritizing the development of generative AI technologies for its cloud computing arm, Amazon Web Services, over enhancing Alexa.
Amazon has contested the claims made by its former employees, asserting that they are misinformed regarding current developments in Alexa’s AI capabilities, and that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its objective of creating the world’s best personal assistant.