Amazon’s strategy to profit from its Alexa-enabled devices has reportedly faltered, leading to significant financial losses for the company. According to an article in the Wall Street Journal, internal documents suggest that the online retail giant lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of users for these devices, it appears that the Alexa-enabled Echo speakers are primarily used for basic functions such as setting alarms, rather than for shopping on Amazon.
A former senior employee expressed concern over the company’s extensive hiring—reportedly up to 10,000 new staff—resulting in features that may not align with customer needs, describing one initiative as merely creating a “smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid version of the voice assistant. However, some engineers involved in developing this paid tier are reportedly skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on delivering value through its services, not just the sale of devices, and noted that their Devices & Services division has nurtured multiple profitable ventures for Amazon.
Meanwhile, it has come to light that Amazon’s new AI-powered version of Alexa, which was showcased in September, is reportedly far from readiness. Sources indicate the company lacks sufficient data and the necessary hardware, such as the chips required for the large language model that drives the new voice assistant. Additionally, it appears Amazon has shifted its priorities towards enhancing generative AI capabilities for its cloud computing arm, Amazon Web Services.
Amazon has refuted claims from former employees regarding the status of its Alexa AI projects, stating that its Artificial General Intelligence team is equipped with both proprietary Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains steadfast—to create the world’s leading personal assistant.