Amazon’s strategy to generate revenue from its Alexa-enabled devices appears to be faltering, resulting in significant financial losses for the company. Reports indicate that Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and similar devices between 2017 and 2021, according to internal documents and sources familiar with the situation.
Despite boasting a vast customer base, Amazon’s Echo speakers are reportedly more frequently utilized for basic tasks like setting alarms rather than shopping on the platform. A former Amazon employee expressed concerns about the efficacy of these devices, 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 solutions, including the introduction of a paid version of Alexa. However, some engineers working on this paid model are skeptical about its potential impact on improving the situation.
An Amazon representative emphasized the company’s focus on creating value beyond just device sales, noting that the Devices & Services division has successfully established various profitable ventures and is positioned to continue achieving this in the future.
In another development, Amazon’s new AI-powered version of Alexa, which was showcased last month, is reportedly not yet ready. Former employees have indicated that the company lacks adequate data and the necessary chips to support the advanced language model required for the upgraded assistant. Additionally, Amazon has allegedly shifted its focus to enhancing generative AI for its cloud service, Amazon Web Services, rather than prioritizing updates to Alexa.
In response to these criticisms, Amazon has asserted that these former employees are misinformed about the ongoing efforts within the Alexa AI team, claiming they have access to both its proprietary Trainium chips and Nvidia graphics processing units. The company remains committed to its objective of developing the leading personal assistant.