Amazon’s efforts to profit from its Alexa-enabled devices appear to be backfiring, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers using these devices, the Alexa-powered Echo speakers are mostly utilized for setting alarms and various free applications, rather than for shopping on Amazon.
One former senior Amazon employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers within Amazon are skeptical about the effectiveness of this approach.
An Amazon spokesperson emphasized the company’s focus on the value generated from customer interactions, rather than merely device sales. They noted that the Devices & Services organization has successfully established several profitable ventures for Amazon and is expected to continue this trend.
On another front, Amazon’s new AI-enhanced version of Alexa, which was showcased in September, is allegedly far from completion. According to former employees, the company lacks sufficient data and necessary chips to effectively run the large language model (LLM) that powers the upgraded assistant. Reports indicate that Amazon has shifted its priorities to advance generative AI for its cloud services division, Amazon Web Services.
In response to these concerns, Amazon disputed the claims made by former employees and asserted that the Amazon Artificial General Intelligence team has access to essential in-house Trainium chips and Nvidia GPUs. The company remains committed to its objective of developing the world’s premier personal assistant.