Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. From 2017 to 2021, Amazon lost over $25 billion on its Echo, Kindle, and similar devices, according to internal documents and sources quoted by the Wall Street Journal. While the company boasts hundreds of millions of customers using its devices, it appears that Alexa-enabled Echo speakers are primarily used for setting alarms and other free applications, rather than facilitating shopping on Amazon.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” highlighting the disconnect between investment and actual profitability.
Amazon CEO Andy Jassy is reportedly seeking solutions to this issue and is planning to introduce a paid version of its voice assistant. However, reports indicate that some engineers involved in developing the paid version are skeptical about its potential success.
An Amazon spokesperson remarked that the company is “focused on the value we create when customers use our services, not just when they buy our devices,” asserting that the Devices & Services organization has generated several profitable ventures for Amazon and remains well-positioned for future success.
Furthermore, Amazon’s latest AI-enhanced version of Alexa, demonstrated in September, is reportedly not ready for launch, according to former employees. The company faces challenges in acquiring sufficient data and the necessary chips to support the large language model driving the new assistant. Additionally, it appears Amazon has shifted its focus towards advancing generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon has stated that former employees are misinformed regarding its current efforts in Alexa’s AI development, claiming the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). The company’s objective for Alexa remains steadfast: to develop the world’s best personal assistant.