Amazon’s efforts to monetize its Alexa-enabled devices have not yielded the expected results, leading to significant financial losses amounting to over $25 billion between 2017 and 2021. This information comes from an internal review reported by the Wall Street Journal, based on documents and sources familiar with the situation. Although Amazon boasts hundreds of millions of customers using its devices, it appears that many utilize the Alexa-enabled Echo speakers primarily for basic functions like setting alarms, rather than engaging in shopping activities on Amazon.
A former senior employee remarked on the situation, indicating concerns about the company’s investment in staffing and device development, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
To address these challenges, Amazon CEO Andy Jassy is exploring new solutions, including the introduction of a paid subscription tier for Alexa. Nevertheless, some engineers involved in the project have expressed skepticism about whether this move will significantly change the current situation.
An Amazon spokesperson emphasized the company’s focus on the value generated from customer interactions with its services, rather than solely on device sales. This statement highlighted that the Devices & Services division has established profitable ventures and plans to continue this trend in the future.
In addition, Amazon’s latest iteration of Alexa, which leverages artificial intelligence, is reportedly still in development and lacks readiness. Former employees have raised concerns about insufficient data and the availability of necessary hardware for the advanced language model that underpins this new assistant. The company has reportedly shifted its focus toward enhancing generative AI capabilities within its Amazon Web Services cloud division.
Amazon refuted claims made by former employees regarding its AI initiatives, asserting that its Artificial General Intelligence team has proper access to both its proprietary Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to developing what it aims to be “the world’s best personal assistant.”