Amazon’s strategy to generate profit from its Alexa-enabled devices has reportedly not succeeded, resulting in significant losses for the company. According to internal documents and sources familiar with the situation, the retail giant experienced a loss exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. While Amazon boasts a vast customer base for its devices, the use of its Alexa-enabled Echo speakers is primarily for basic tasks like setting alarms rather than driving purchases on its platform.
A former senior Amazon employee expressed concerns about the investment in staff and technology that led to this outcome, referring to it as building merely a “smart timer.” In response to these challenges, Amazon’s CEO Andy Jassy is seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in this initiative have doubts about its potential impact.
An Amazon spokesperson stated that the company prioritizes the value created for customers through its services, emphasizing that its Devices & Services division has established several profitable ventures and is positioned for future success.
Additionally, reports suggest that the new AI-powered version of Alexa, which was showcased in September, is not yet ready for rollout. Former employees noted that the company lacks sufficient data and necessary hardware to support the large language model required for the updated assistant. Furthermore, Amazon is said to be focusing on generative AI development for its cloud division, Amazon Web Services, potentially sidelining Alexa’s AI advancements.
In response to these concerns, Amazon has refuted claims made by former employees, asserting that its Artificial General Intelligence team has access to essential resources and remains committed to developing “the world’s best personal assistant.”