Amazon’s strategy to generate revenue from its Alexa-enabled devices has fallen short, contributing to significant financial losses for the company. Reports indicate that Amazon lost over $25 billion on its Echo, Kindle, and other devices from 2017 to 2021, as revealed by internal documents and insights from anonymous sources familiar with the situation. Despite having hundreds of millions of customers using these devices, it appears that Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms and not for making purchases on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” highlighting dissatisfaction with the performance of the devices.
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the launch of a paid version of the voice assistant. However, some engineers working on this initiative have expressed skepticism about its potential to drive meaningful change.
An Amazon spokesperson emphasized the company’s focus on creating value through its services rather than solely selling devices. They noted that the Devices & Services division has established several profitable ventures and is positioned for future success.
Additionally, Amazon’s new AI-driven version of Alexa, recently showcased in September, is allegedly far from launch-ready, according to former employees. The company reportedly lacks sufficient data and the necessary chips to support the advanced large language model required for the new assistant. There are also claims that Amazon has shifted its priorities away from AI development for Alexa in favor of enhancing generative AI capabilities within its cloud computing service, Amazon Web Services.
In response to these criticisms, Amazon countered that its former employees are misinformed about the current status of its Alexa AI projects. The company asserted that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, affirming its commitment to building “the world’s best personal assistant.”