Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company. Internal documents and anonymous sources indicate that between 2017 and 2021, Amazon incurred over $25 billion in losses from its Echo, Kindle, and related devices.
Despite having hundreds of millions of customers for its products, the Alexa-enabled Echo speakers are predominantly used for basic tasks like setting alarms and accessing free apps, rather than for shopping on Amazon. A former senior Amazon employee expressed concern about the company’s investment in hiring thousands of employees to develop what they viewed as a “smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for Alexa. However, some engineers working on this version have expressed skepticism about its potential success.
An Amazon spokesperson emphasized the company’s focus on creating value for customers beyond device sales, stating that its Devices & Services organization has established several profitable ventures.
In addition, Amazon’s new AI-powered version of Alexa was demonstrated in September but is reportedly far from completion. Former employees have noted that the company lacks sufficient data and the necessary chips to support the new large language model powering the assistant. Moreover, Amazon has shifted its focus towards developing generative AI for its cloud platform, Amazon Web Services, diverting attention from AI advancements for Alexa.
Amazon has countered these claims, asserting that its former employees are misinformed about the progress of its AI initiatives. The company maintains that its Artificial General Intelligence team has access to the requisite technology to fulfill its goal of creating the best personal assistant available.