Amazon’s strategy to monetize its Alexa-enabled devices has not yielded the expected profits, resulting in significant financial losses for the company. Reports indicate that Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, according to the Wall Street Journal, which referenced internal documents and anonymous sources familiar with the situation. Despite having hundreds of millions of customers for its devices, users primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms, rather than making purchases on Amazon.
A former senior Amazon employee expressed concerns about the efficiency of resources, saying, “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 seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved in developing this new version of Alexa are skeptical about its potential effectiveness.
An Amazon spokesperson emphasized that the company is dedicated to delivering value beyond merely selling devices, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In addition, the anticipated rollout of Amazon’s new AI-powered Alexa, showcased in September, faces hurdles, as former employees claim it is far from ready. The company allegedly lacks sufficient data and the necessary chip access to support the large language model (LLM) driving the updated version of its virtual assistant. Resources have reportedly been redirected to prioritize generative AI development for Amazon Web Services instead.
Amazon has responded to these claims, asserting that the information from former employees is inaccurate and that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). The company reaffirmed its commitment to its goal of creating the world’s best personal assistant.