Amazon’s strategy to monetize its Alexa-enabled devices has reportedly resulted in substantial losses, amounting to over $25 billion from 2017 to 2021. This information comes from internal documents and sources cited by the Wall Street Journal. Despite having hundreds of millions of customers for its devices, users primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms, rather than shopping, which limits revenue potential.
A former senior Amazon employee expressed concerns over the company’s huge investment, indicating that the focus has shifted towards developing features that do not necessarily enhance profitability.
In response to these challenges, Amazon’s CEO Andy Jassy is seeking solutions and plans to introduce a paid tier for its voice assistant. However, some engineers involved in the development of this new version of Alexa are skeptical about its efficacy in improving profits.
An Amazon spokesperson stated that the company is concentrating on the value generated through customer engagement with its services rather than solely on device sales. They noted that the Devices & Services division has successfully established several profitable initiatives and is poised for continued success.
In related news, Amazon’s newly demonstrated AI-powered Alexa may not be ready for launch, according to former employees. They claim the company lacks sufficient data and access to necessary chips for the advanced language model that would be integral to the virtual assistant. Furthermore, Amazon is reportedly prioritizing generative AI development for its cloud computing unit, Amazon Web Services, over the improvements to Alexa.
In defense of its current initiatives, Amazon contends that former employees are misinformed about its AI capabilities, asserting that its Artificial General Intelligence team has access to both in-house chips and Nvidia GPUs, with a commitment to creating the best personal assistant available.