Amazon’s efforts to monetize its Alexa-enabled devices have reportedly fallen short, resulting in substantial financial losses. According to the Wall Street Journal, the company incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the matter. Although Amazon boasts hundreds of millions of device users, the Echo speakers are primarily used for basic functions like setting alarms and accessing free apps, rather than facilitating shopping on Amazon’s platform.
A former senior Amazon employee expressed concerns about the investment in personnel and technology that ultimately led to minimal returns, 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, including the introduction of a paid version of Alexa. However, some engineers involved in this initiative have expressed skepticism about its potential impact.
An Amazon representative defended the company’s approach, emphasizing a focus on the value created when customers engage with its services, beyond mere sales of devices. The spokesperson noted that the Devices & Services organization has successfully established various profitable ventures within Amazon and is poised for future success.
In the meantime, Amazon’s new AI-powered Alexa, showcased in September, is reportedly not ready for launch, according to former employees. The company reportedly lacks sufficient data and access to necessary chips to operate the advanced large language model that would underpin the updated virtual assistant. Furthermore, Amazon is said to have shifted its focus towards developing generative AI for its cloud service, Amazon Web Services, rather than prioritizing the AI-enhanced version of Alexa.
In response to these claims, Amazon refuted the assertions of its former employees, stating that they are misinformed about the current status of its Alexa AI developments, noting that the Amazon Artificial General Intelligence team has the needed resources, including proprietary Trainium chips and Nvidia GPUs. The company remains committed to its objective of creating the best personal assistant in the market.