Amazon’s efforts to monetize its Alexa-enabled devices have not yielded the expected results, with the company reportedly losing billions.
From 2017 to 2021, Amazon experienced losses exceeding $25 billion from its Echo, Kindle, and other devices, according to internal documents and sources cited by the Wall Street Journal. While the company boasts hundreds of millions of device users, many customers primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms, rather than making purchases through Amazon.
A former senior Amazon employee expressed concerns, 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 exploring solutions, including the introduction of a paid tier for the voice assistant. However, some engineers working on this initiative have expressed doubts about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value generated from service usage, beyond just device sales, and noted that the Devices & Services division has established several profitable ventures that it aims to continue.
On the AI front, the new version of Alexa, which was demonstrated in September, is reportedly not ready for launch, according to former employees. The company lacks sufficient data and access to the necessary chips for the large language model behind the new assistant, as it has shifted priorities towards generative AI for Amazon Web Services.
Amazon has countered claims from former employees about the state of its AI projects, asserting that the Amazon Artificial General Intelligence team has access to proprietary Trainium chips and Nvidia GPUs. The company’s objective for Alexa, they stated, is to develop the world’s best personal assistant.