Amazon’s efforts to turn a profit from its Alexa-enabled devices have reportedly resulted in significant financial losses, with the company losing over $25 billion from its Echo and Kindle products between 2017 and 2021, according to internal documents and sources familiar with the situation, as reported by the Wall Street Journal. Despite having hundreds of millions of customers using these devices, it seems that consumers primarily utilize Alexa for functions like setting alarms and accessing free applications, rather than making purchases on Amazon.
A former Amazon executive noted concerns about the company’s hiring practices and product development, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In an effort to address these issues, Amazon CEO Andy Jassy is reportedly working on introducing a paid version of its voice assistant. However, some engineers involved in this initiative have expressed skepticism about its potential success.
An Amazon spokesperson stated that the company prioritizes the value created through its services rather than just device sales. They emphasized that the company’s Devices & Services organization has established several profitable businesses and is poised for future success.
Meanwhile, Amazon’s new AI-powered version of Alexa, showcased in September, is reportedly facing challenges in readiness, with former employees claiming that the necessary data and technology to support its large language model are lacking. The company has also supposedly shifted focus towards generative AI for its Amazon Web Services division, deprioritizing the new Alexa.
In response to these claims, Amazon asserted that its former employees are mistaken regarding its AI efforts, stating that the Amazon Artificial General Intelligence team has adequate access to the essential chips and tools. They reiterated their commitment to creating the best personal assistant in the world through Alexa.