Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, resulting in substantial financial losses for the company. According to internal documents and anonymous sources cited by the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers using these devices, the usage patterns suggest that Amazon’s Echo speakers are primarily utilized for setting alarms and other free applications, rather than for shopping on Amazon.
A former senior employee expressed concern about the situation, noting, “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 reportedly exploring solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid version have voiced doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company’s focus is on the value generated from customer interactions with its services, rather than solely on device sales. They highlighted that the Devices & Services division has created several profitable ventures for Amazon and is well-positioned for future success.
In addition, Amazon’s new AI-powered version of Alexa, which was showcased in September, is reportedly far from completion, as former employees indicated that the company lacks adequate data and access to the necessary chips to support the large language model driving the updated assistant. The company has also allegedly shifted its priorities towards enhancing generative AI for Amazon Web Services, its cloud computing branch.
Amazon has countered these claims, asserting that the information from former employees is inaccurate. The company stated that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units. Amazon reaffirmed its commitment to its objective of developing “the world’s best personal assistant.”