Amazon’s strategy to profit from its Alexa-enabled devices has not been successful, leading to significant financial losses for the company. Reports indicate that Amazon lost more than $25 billion on products like the Echo and Kindle between 2017 and 2021, according to internal documents and sources familiar with the situation. Despite having hundreds of millions of customers for these devices, the Echo speakers are primarily being used for basic functions such as setting alarms instead of driving sales on Amazon.
A former senior Amazon employee commented on the situation, expressing concerns about the outcomes of their hiring and development efforts.
Amazon CEO Andy Jassy is reportedly seeking solutions to this issue, with plans to launch a paid version of its voice assistant. However, some engineers working on this project have expressed skepticism about its potential impact.
An Amazon spokesperson stated that the company is focused on the value created when customers utilize its services, beyond just device sales. They emphasized that the Devices & Services division has successfully established several profitable businesses.
In addition, Amazon’s new AI-powered version of Alexa, which was showcased in September, reportedly is not yet fully developed. Former employees noted that the company lacks sufficient data and the necessary chips to support the advanced language model for the updated assistant. Furthermore, Amazon is shifting its priorities to develop generative AI for its cloud division, Amazon Web Services.
In response to these claims, Amazon refuted the assertions made by former employees, asserting that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains unchanged: to create the leading personal assistant.