Amazon’s strategy to profit from its Alexa-enabled devices has not yielded the expected results, reportedly resulting in substantial financial losses for the company. According to the Wall Street Journal, internal documents and sources familiar with the situation reveal that Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of customers using these devices, it appears that Alexa-enabled Echo speakers are primarily being utilized for simple tasks like setting alarms and using free applications, rather than for shopping on Amazon. A former senior Amazon employee expressed concerns about the investment in these devices, 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 seeking solutions, including the launch of a paid tier for Alexa. However, some engineers involved in this project are skeptical about its potential impact.
An Amazon spokesperson remarked, “We are focused on the value we create when customers use our services, not just when they buy our devices.” The spokesperson also emphasized that the Devices & Services division has developed several profitable ventures for Amazon and is positioned for continued success.
Additionally, reports suggest that Amazon’s new AI-driven version of Alexa, which was showcased in September, is still far from completion. Former employees have indicated that the company lacks sufficient data and the necessary hardware to support the large language model (LLM) for the updated assistant. Furthermore, Amazon is said to have prioritized generative AI development for its cloud services over advancements in Alexa.
In response to these claims, Amazon contended that the assertions from former employees are incorrect, asserting that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs to support their Alexa AI initiatives. The company’s vision for Alexa remains focused on developing the world’s leading personal assistant.