Amazon’s efforts to monetize its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to a report from the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and unnamed sources.
Despite having hundreds of millions of customers using its devices, data suggests that the Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms, rather than for shopping on Amazon. A former senior Amazon employee expressed concerns about the company’s focus, 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 exploring a paid tier for the voice assistant, although some engineers involved in this initiative are skeptical about its potential impact. An Amazon spokesperson emphasized that the company is committed to creating value for users through its services, not just device sales, and that its Devices & Services organization has established several profitable ventures.
Additionally, Amazon’s new AI-powered version of Alexa, which was demonstrated in September, is said to be far from completion, with former employees citing a lack of data and necessary technology to support the large language model driving the assistant. The company has also reportedly shifted its focus towards developing generative AI for its cloud services, Amazon Web Services, instead of advancing the AI capabilities of Alexa.
In response to these criticisms, Amazon asserted that the concerns raised by former employees are inaccurate and that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its goal of creating the world’s best personal assistant.