Amazon’s strategy to monetize its Alexa-enabled devices appears to have failed, resulting in significant financial losses for the company. Reports indicate that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from anonymous sources close to the matter.
Despite registering hundreds of millions of users, the Alexa-enabled Echo speakers are primarily utilized for basic functions, such as setting alarms and accessing free applications, rather than facilitating purchases on Amazon. A former senior employee expressed concerns about the company’s hiring practices, suggesting they built a sophisticated timer instead of a lucrative product.
In response to these challenges, Amazon CEO Andy Jassy is reportedly exploring the introduction of a paid tier for its voice assistant. However, some engineers involved in the development of this new version of Alexa have raised doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company prioritizes the value provided through its services rather than just device sales, asserting that its Devices & Services division has successfully established several profitable ventures and is well-equipped for future growth.
Meanwhile, the newly introduced AI-powered version of Alexa, demoed in September, is reportedly not prepared for launch, according to former employees. They have indicated that the necessary data and chips required to operate the new large language model (LLM) are insufficient. Furthermore, Amazon is said to be shifting its focus from AI advancements for Alexa to developing generative AI for its Amazon Web Services cloud computing division.
In response to these claims, Amazon has disputed the accuracy of the former employees’ statements, stating that its Artificial General Intelligence team has access to crucial resources, including proprietary chips and Nvidia GPUs. The company remains committed to its goal of creating “the world’s best personal assistant” through Alexa.