Amazon’s strategy to generate profits through its Alexa-enabled devices has reportedly resulted in significant losses, with the company losing over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, according to internal documents and sources cited by the Wall Street Journal. Although Amazon boasts a customer base of hundreds of millions for these devices, it appears that its Echo speakers are primarily used for basic functions like setting alarms rather than for shopping on Amazon.
A former senior employee expressed concerns about the company’s investment, highlighting that despite hiring 10,000 people, the focus seems to have shifted to creating a smart timer rather than generating revenue. In response to these challenges, CEO Andy Jassy is reportedly exploring ways to improve the situation by introducing a paid tier for Alexa. However, some engineers involved in developing this paid version have raised doubts about its effectiveness.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services rather than solely relying on device sales. They noted that the Devices & Services organization has successfully established profitable businesses and aims to continue that trend in the future.
In addition, Amazon’s new AI-powered version of Alexa, which was showcased in September, is reportedly not ready for launch, according to former employees. The company is said to be lacking sufficient data and the necessary chips to support the advanced language model. Instead, Amazon has shifted its focus toward developing generative AI solutions for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon stated that its former employees are misinformed about the current status of Alexa’s AI development. The company maintains that its Artificial General Intelligence team has access to both its own Trainium chips as well as Nvidia GPUs and reassured stakeholders that its ambition to create the best personal assistant remains unchanged.