Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, leading to substantial financial losses for the company, according to internal sources cited by the Wall Street Journal. From 2017 to 2021, Amazon incurred losses exceeding $25 billion from its Echo and Kindle devices. Despite having hundreds of millions of customers, the Echo speakers are primarily used for basic functions such as setting alarms rather than facilitating purchases on Amazon.
A former high-ranking Amazon official expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon’s CEO Andy Jassy is exploring solutions, including launching a paid version of its voice assistant. However, some engineers involved in the paid Alexa project remain skeptical about its potential effectiveness.
An Amazon spokesperson clarified that the company is focused on the value delivered through its services, not just device sales, and highlighted that the Devices & Services division has generated profitable ventures for Amazon and is positioned for continued success.
In a separate development, Amazon’s upcoming AI-enhanced version of Alexa, which was showcased in September, is reportedly far from ready. Former employees have noted that the company lacks sufficient data and necessary chips to support the large language model essential for the new assistant. Moreover, Amazon has shifted priorities toward enhancing generative AI for its cloud division, Amazon Web Services.
In defense of its current AI initiatives, Amazon stated that criticisms from former employees are misguided and that its Artificial General Intelligence team has access to both its own Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains clear: to develop the world’s best personal assistant.