Amazon’s efforts to monetize its Alexa-enabled devices have reportedly resulted in significant financial losses, with the company estimated to have lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, according to internal documents and sources familiar with the matter. Despite having millions of customers using its devices, the Alexa-enabled Echo speakers are primarily utilized for functions like setting alarms and utilizing free applications rather than driving purchases on Amazon.
A former senior Amazon employee expressed concern about the situation, 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 subscription tier for the voice assistant. However, some engineers involved in developing this paid version reportedly doubt its potential impact.
An Amazon spokesperson emphasized that the company is focused on the value created through the use of its services, not solely on device sales. They noted that Amazon’s Devices & Services organization has established several profitable ventures and is positioned for future success.
Additionally, Amazon’s upcoming AI-powered version of Alexa, which was showcased in September, is reportedly far from being ready, according to former employees. The company lacks sufficient data and access to essential chips for operating the large language model behind the new assistant. Moreover, Amazon has allegedly shifted its priorities away from AI development for Alexa to concentrate on generative AI for its cloud services division, Amazon Web Services.
In response to these claims, Amazon countered that former employees are mistaken about the state of its AI projects, asserting that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company maintains that its objective remains to create the world’s premier personal assistant.