Amazon’s strategy to generate revenue from Alexa-enabled devices has not yielded the expected results, leading to significant financial losses for the company. Reports indicate that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on information from internal documents and sources familiar with the situation.
Despite having hundreds of millions of customers using its devices, Echo speakers are primarily utilized for basic tasks such as setting alarms rather than for shopping. A former senior Amazon employee expressed concerns about the lack of innovation, saying, “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 exploring solutions, including a potential paid version of the Alexa voice assistant. However, some engineers have voiced skepticism about whether this change will lead to any substantial improvements.
An Amazon representative emphasized the company’s commitment to delivering value through its services, noting that the Devices & Services organization has successfully established profitable ventures, positioning them for future growth.
In addition, Amazon’s newly introduced AI-enhanced Alexa, showcased in September, is reportedly not yet fully developed, according to former employees. The company is said to lack sufficient data and access to the necessary hardware to effectively operate the advanced language model that will power this version of the assistant. Furthermore, Amazon appears to be shifting its focus toward generative AI for its cloud platform, Amazon Web Services.
Amazon countered claims from former employees, asserting that the Amazon Artificial General Intelligence team has adequate access to the required resources, including in-house Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains consistent: to create the best personal assistant available.