Amazon’s efforts to profit from its Alexa-enabled devices have reportedly resulted in significant losses, totaling over $25 billion from 2017 to 2021, according to internal documents and sources familiar with the matter as reported by the Wall Street Journal. Despite having hundreds of millions of customers, many users primarily utilize Echo speakers for basic functions like setting alarms rather than shopping on Amazon.
A former senior Amazon employee expressed concerns about the company’s investments, highlighting that after hiring thousands of employees, the outcomes have been less impactful than anticipated. In response, CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for Alexa. However, engineers involved in developing this paid version have voiced skepticism about its potential effectiveness.
An Amazon spokesperson stated that the company focuses on the value generated from service usage rather than just device sales, asserting that the Devices & Services organization has established several profitable ventures for Amazon.
In addition, a new AI-driven version of Alexa, recently showcased in September, is said to be far from completion. Former employees indicated that the necessary data and hardware, specifically chips required to support the advanced language model for this upgraded assistant, are lacking. Furthermore, it appears Amazon is prioritizing generative artificial intelligence developments within its cloud computing division, Amazon Web Services, over the new Alexa features.
Amazon has countered these claims, asserting that its Artificial General Intelligence team has access to the required in-house Trainium chips and Nvidia GPUs and maintains that its strategy for Alexa remains unchanged, focused on creating the best personal assistant available.