Amazon’s efforts to generate revenue from its Alexa-enabled devices have fallen short, resulting in significant financial losses for the company, according to reports. From 2017 to 2021, Amazon reportedly lost over $25 billion on devices such as the Echo and Kindle, as per internal documents and sources familiar with the situation. While the company boasts hundreds of millions of customers for its devices, it seems that many users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms, rather than making purchases on Amazon.
A former senior employee of Amazon expressed concerns about the company’s direction, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid subscription service for Alexa. However, some engineers working on this new version are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on creating value beyond just device sales, claiming that its Devices & Services organization has established several profitable ventures and is well-positioned for future success.
In addition, Amazon unveiled a new artificial intelligence-powered version of Alexa in September, but former employees have indicated that it is far from being operational. They noted that the company lacks sufficient data and access to the necessary chips to support the large language model behind the new assistant. Reports also suggest that Amazon has shifted its focus towards generative AI development for its cloud division, Amazon Web Services.
In response to criticism, Amazon has stated that claims from former employees about its current AI efforts are incorrect, insisting that its Artificial General Intelligence team has access to both its proprietary chips and Nvidia GPUs. The company’s goal for Alexa remains to create “the world’s best personal assistant.”