Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly failed, leading to significant financial losses for the company. According to a report from the Wall Street Journal, internal documents and sources reveal that between 2017 and 2021, Amazon lost more than $25 billion on its devices, including the Echo and Kindle.
Although Amazon boasts hundreds of millions of customers for these devices, usage appears to be skewed towards setting alarms and utilizing free applications rather than driving sales through 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 seeking solutions, which may include a paid version of its voice assistant. Nevertheless, sources indicate that some engineers involved in developing this paid version are skeptical about its potential impact.
An Amazon spokesperson defended the company’s approach, stating, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” noting that the Devices & Services organization has launched several profitable ventures and is positioned for future success.
In addition, the rollout of Amazon’s new AI-driven Alexa, showcased in September, reportedly faces delays. Former employees mention that the necessary data and chips to support the advanced language model behind the new assistant are lacking. The company has also shifted priorities to emphasize developing generative AI for its cloud computing segment, Amazon Web Services.
Amazon refuted claims from former employees, asserting that its Artificial General Intelligence team has access to the required chips and technology. The company reaffirmed its commitment to creating “the world’s best personal assistant” with Alexa.