Amazon’s strategy to profit from its Alexa-enabled devices has not been successful, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, Amazon lost over $25 billion between 2017 and 2021 on its Echo, Kindle, and other hardware, as per internal documents and sources familiar with the situation. Despite having hundreds of millions of customers using these devices, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms rather than shopping on Amazon.
A former senior employee expressed concern, 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 exploring a solution by introducing a paid version of Alexa. However, some engineers working on this paid version have expressed skepticism about its potential success.
An Amazon spokesperson emphasized that the company focuses on the value created for customers beyond just device sales and highlighted that its Devices & Services organization has successfully established profitable ventures.
In a related development, Amazon’s new AI-powered Alexa, showcased in September, is reportedly far from completion, according to former employees. The company is said to lack sufficient data and access to necessary chips for operating the new large language model (LLM) behind the assistant. It has also shifted its focus to developing generative AI for its cloud division, Amazon Web Services, rather than prioritizing the AI-powered version of Alexa.
Amazon disputed claims from former employees, stating that they are misinformed about the progress of Alexa’s AI and that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reiterating their ongoing commitment to building “the world’s best personal assistant.”