Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in substantial financial losses for the company. From 2017 to 2021, Amazon is said to have lost over $25 billion on its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation.
Despite boasting hundreds of millions of customers for its devices, the Echo speakers equipped with Alexa are primarily used for basic functions like setting alarms and using free applications, rather than making purchases on Amazon.
A former senior employee expressed concerns, stating that the company’s large investment in manpower had not translated into meaningful innovation.
In response to these challenges, CEO Andy Jassy is exploring solutions, including the introduction of a premium version of the voice assistant. However, engineers working on this project have reportedly expressed skepticism about its potential impact.
An Amazon spokesperson emphasized that the company is committed to delivering value through its services, not just through device sales. They highlighted that the Devices & Services organization has successfully established several profitable ventures and is poised to continue this trend.
On another front, Amazon’s latest AI-powered version of Alexa, which was showcased in September, is reportedly still underdeveloped, according to former employees. Issues such as insufficient data and inadequate access to necessary hardware are hampering progress. Additionally, the company is said to be prioritizing generative AI for its cloud computing division, Amazon Web Services, over the advancement of Alexa.
In response to these claims, Amazon stated that the assessments from former employees are inaccurate and that the Amazon Artificial General Intelligence team is equipped with both proprietary chips and Nvidia GPUs. The company reaffirmed its ambition to create the world’s leading personal assistant.