Amazon’s strategy to profit from its Alexa-enabled devices appears to be falling short, with the company reportedly facing losses in the billions. According to internal documents and unnamed sources cited by the Wall Street Journal, Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although the company boasts hundreds of millions of customers for its devices, the primary use of Alexa-enabled Echo speakers tends to be for basic functions like setting alarms and using free apps rather than making purchases on Amazon.
A former senior employee expressed concern about the situation, stating, “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 paid version have doubts about its potential effectiveness.
An Amazon spokesperson defended the company’s approach, emphasizing that it is focused on the value created for customers beyond just device sales. They noted that the Devices & Services division has established several profitable ventures for Amazon and is well-positioned for future success.
In addition, Amazon is facing challenges with its new AI-powered Alexa, unveiled in September. Former employees have claimed that the technology is not ready for deployment, lacking the necessary data and computational resources to operate the large language model (LLM) that underpins the upgraded assistant. Reports suggest that Amazon has shifted its priorities to enhance generative AI capabilities for its cloud computing division, Amazon Web Services.
Amazon has refuted claims from former employees, stating that they are misinformed about current developments in the Alexa AI space. The company asserts that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, and reiterates its commitment to creating the best personal assistant in the world.