Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly not succeeded, leading the company to incur losses amounting to billions of dollars. According to a report from the Wall Street Journal, the online retail titan lost over $25 billion from 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, it appears that Alexa-enabled Echo speakers are used primarily for basic functions like setting alarms, rather than shopping on Amazon.
A former senior Amazon employee expressed concerns, saying, “We worried we’ve hired 10,000 people, and we’ve built a smart timer.” In response, CEO Andy Jassy is reportedly seeking solutions and is set to launch a paid version of Alexa. However, some engineers involved in this project have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers using its services, not just through device sales. They highlighted that the Devices & Services organization has established several profitable ventures and is well-positioned for future success.
In addition, reports indicate that the new AI-powered version of Alexa, showcased by Amazon in September, is far from being ready. Former employees claim that the company lacks sufficient data and access to the necessary chips to run the large language model supporting the upgraded assistant. Furthermore, Amazon has allegedly shifted its focus from the AI-powered Alexa to developing generative AI for its cloud computing division, Amazon Web Services.
Amazon has countered these claims, asserting that the statements from former employees are incorrect and that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to its plan for Alexa, aiming to create “the world’s best personal assistant.”