Amazon’s attempts to profit from its Alexa-enabled devices have not met expectations, reportedly resulting in losses totaling over $25 billion from 2017 to 2021. Internal documents and sources familiar with the situation, as cited by the Wall Street Journal, suggest that while Amazon has amassed hundreds of millions of customers for its devices, the usage patterns lean heavily towards basic functionalities—like setting alarms—rather than driving sales through the platform.
A former senior Amazon employee expressed concern over the workforce dedicated to developing these devices, indicating that they invested heavily in features that do not translate into revenue. In response to the financial setbacks, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for Alexa. Nevertheless, there are worries among some engineers about the potential effectiveness of this new approach.
An Amazon spokesperson emphasized the importance of the value created for customers beyond just device sales, asserting that the Devices & Services sector has developed several profitable ventures and is well-positioned for future growth.
In addition, while Amazon recently showcased a new AI-powered version of Alexa, former employees have expressed skepticism about its readiness. Reports indicate that the company lacks sufficient data and access to the necessary technology to support the advanced AI features. Moreover, Amazon is prioritizing efforts in generative AI for its cloud computing service, Amazon Web Services, over enhancements to Alexa.
In response to these concerns, Amazon has stated that the critiques from former employees are misguided, asserting that its Artificial General Intelligence team has access to essential resources and is committed to developing a leading personal assistant.