Amazon’s attempt to profit from its Alexa-enabled devices has not been successful, resulting in significant financial losses for the company. According to reports from the Wall Street Journal, internal documents reveal that Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for free features like setting alarms, rather than for shopping on Amazon.
A former senior employee expressed concerns about the company’s hiring strategy and the focus on developing basic features instead of enhancing the shopping experience. In response to these challenges, Amazon CEO Andy Jassy is exploring solutions, including the launch of a paid tier for Alexa. However, there are doubts among some engineers about the effectiveness of this change.
An Amazon spokesperson emphasized the company’s commitment to creating value through its services beyond just device sales, asserting that the Devices & Services organization has successfully established several profitable ventures.
On a related note, Amazon’s new AI-enhanced Alexa, which was demonstrated in September, is reportedly still in early stages of development. Former employees have stated that the company lacks the necessary data and access to the chips required to support the new version’s underlying large language model. Furthermore, Amazon has shifted its focus towards generative AI projects within its cloud division, Amazon Web Services.
In response to these criticisms, Amazon contended that the former employees are misinformed about the current status of its Alexa AI initiatives, asserting that the team has access to both in-house chips and Nvidia GPUs. The company reiterated its goal of developing the best personal assistant in the world.