Amazon’s strategy to generate revenue from its Alexa-enabled devices appears to have backfired, resulting in significant financial losses for the company. According to reports from the Wall Street Journal, Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from anonymous sources.
Despite boasting hundreds of millions of users for its devices, Amazon’s Echo speakers are primarily utilized for simple tasks like setting alarms rather than for making purchases on the platform. A former senior employee expressed concerns about the company’s focus, 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 launching a paid version of the voice assistant. However, there are concerns among engineers about whether this new tier will yield significant results.
An Amazon spokesperson stated that the company prioritizes the value created for customers through its services and not solely on device sales. They claimed that the Devices & Services division has built several profitable businesses that are poised for continued success.
On the technological front, Amazon’s new AI-powered version of Alexa, presented in September, is reportedly not yet ready. Former employees have indicated a lack of necessary data and hardware to support the advanced large language model that will drive the new assistant. Additionally, Amazon seems to have shifted its focus towards generative AI development for its cloud computing service, Amazon Web Services.
In defense of its position, Amazon stated that former employees’ claims were incorrect. The company asserted that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, emphasizing that its goal for Alexa remains unchanged: to create the world’s best personal assistant.