Amazon’s efforts to profit from its Alexa-enabled devices have not been successful, resulting in significant losses for the company. Reports indicate that from 2017 to 2021, Amazon incurred over $25 billion in losses associated with its Echo, Kindle, and other devices, according to internal documents and sources familiar with the matter. Although Amazon boasts hundreds of millions of customers using its devices, the Echo speakers are primarily utilized for functions such as setting alarms and accessing free applications rather than for shopping.
A former senior employee expressed concerns about the company’s direction, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon’s CEO, Andy Jassy, is exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers involved in this paid version have doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company prioritizes the value generated when customers utilize its services rather than solely when they purchase devices. They noted that the Devices & Services organization has created several profitable ventures for Amazon and is poised to continue this trend.
On another front, Amazon’s new AI-powered Alexa, showcased in September, reportedly still requires significant development, according to former employees. The company lacks adequate data and necessary hardware to support the large language model required for the new iteration of its virtual assistant. Additionally, the development of AI-powered Alexa has been deprioritized in favor of advancing generative AI for Amazon Web Services, their cloud computing division.
Amazon has contested the claims of its former employees, arguing that they are misinformed about the current status of its Alexa AI initiatives. The company maintains that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to building the best personal assistant possible.