Amazon’s strategy to generate revenue through its Alexa-enabled devices has not been successful, with the company reportedly losing billions of dollars. From 2017 to 2021, Amazon lost over $25 billion on devices like Echo and Kindle, according to a report by the Wall Street Journal, which cited internal documents and sources familiar with the situation. Although Amazon has attracted hundreds of millions of customers for its devices, usage patterns indicate that many consumers primarily use Alexa for basic functions such as setting alarms rather than for shopping.
A former senior Amazon employee expressed concerns about the company’s investments, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” To address these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid version of Alexa. Nonetheless, some engineers involved in this project are skeptical about its potential impact.
An Amazon spokesperson emphasized that the company focuses on creating value for customers using its services beyond just device sales, insisting that its Devices & Services division has developed several profitable ventures and is well-positioned for future success.
In addition, Amazon’s new AI-powered Alexa, which was showcased in September, is reportedly not ready for deployment, as former employees indicated the company lacks sufficient data and the necessary chips to operate the large language model that underlies the updated assistant. Furthermore, Amazon has shifted its priorities to advance generative AI for its cloud computing arm, Amazon Web Services.
In response to these claims, Amazon stated that the information from former employees is incorrect and that its Artificial General Intelligence team has access to both internal Trainium chips and Nvidia GPUs. The company’s goal for Alexa continues to be the development of the world’s leading personal assistant.