Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly not met expectations, resulting in significant financial losses for the company. According to internal documents cited by the Wall Street Journal, Amazon lost over $25 billion between 2017 and 2021 on products like the Echo and Kindle. While the company has attracted hundreds of millions of customers for these devices, it appears that many users primarily rely on them for basic functions like setting alarms, rather than for shopping.
A former senior Amazon employee expressed concerns about the company’s strategy, 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 considering a paid subscription model for Alexa. However, some engineers involved in developing this paid version are skeptical about its potential effectiveness, according to sources familiar with the discussions.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services, asserting that the Devices & Services division has successfully established profitable ventures and is positioned for future success.
Additionally, the new AI-powered version of Alexa, showcased in September, is reportedly not yet ready for launch. Former employees claim Amazon lacks sufficient data and the necessary chips to support the large language model that would drive advancements in the virtual assistant. The company has also chosen to prioritize generative AI developments for its Amazon Web Services division over the new Alexa, as reported by Fortune.
Amazon refuted claims made by former employees about its AI capabilities, stating that its Artificial General Intelligence team has access to both internal Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains to create “the world’s best personal assistant.”