Amazon’s efforts to generate profit from its Alexa-enabled devices have reportedly not succeeded, leading to significant financial losses for the company. According to internal documents and unnamed sources cited by the Wall Street Journal, Amazon incurred losses exceeding $25 billion on devices such as the Echo and Kindle from 2017 to 2021.
Despite having hundreds of millions of customers using its devices, the voice-activated Echo speakers are reportedly utilized mainly for setting alarms and accessing free applications rather than shopping on Amazon. A former senior employee expressed concern about this trend, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In light of these challenges, Amazon CEO Andy Jassy is seeking solutions, which reportedly include the introduction of a paid version of its voice assistant. However, sources mentioned that some engineers involved in developing this paid version are skeptical about its potential impact.
An Amazon spokesperson emphasized that the company’s focus is on the value delivered to customers through its services, not just on sales from devices. They noted that the organization’s Devices & Services division has successfully established several profitable business lines and is well-positioned for future success.
Furthermore, the company has demonstrated a new AI-powered version of Alexa, but insiders claim it is far from ready for launch. Concerns have been raised about insufficient data and access to necessary chip technologies to support the large language model driving the upgraded assistant. Reports also indicate that Amazon has deprioritized the AI-enhanced Alexa in favor of advancing generative AI for its cloud computing division, Amazon Web Services.
In response, Amazon disputed the claims made by former employees, asserting that they are misinformed about the current state of its AI projects for Alexa. The company stated that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia graphics processing units and reaffirmed its goal to develop “the world’s best personal assistant.”