Amazon’s strategy to generate revenue from its Alexa-enabled devices has fallen short, leading to significant financial losses for the company. Reports indicate that between 2017 and 2021, Amazon lost over $25 billion on products like the Echo and Kindle, according to the Wall Street Journal. Internal documents and sources familiar with the situation reveal that although Amazon offers its devices to hundreds of millions of customers, the primary use for the Alexa-enabled Echo speakers is for basic functions, such as setting alarms, rather than making purchases on Amazon.
A former senior employee expressed concerns about the company’s focus, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is reportedly exploring a paid subscription model for Alexa. However, some engineers working on this initiative have voiced skepticism about its potential success.
An Amazon spokesperson highlighted the company’s commitment to creating value through its services rather than just device sales, noting that its Devices & Services division has developed several profitable ventures and is well-positioned for future success.
Additionally, Amazon’s latest AI-enhanced Alexa, which was showcased in September, is reportedly not nearing completion, according to former employees. They claim the company lacks sufficient data and the necessary chips to support the large language model driving the new version of the assistant. Moreover, Amazon has shifted its focus toward generative AI for its cloud computing platform, Amazon Web Services, which has led to the deprioritization of the AI-powered Alexa project.
In response to these claims, Amazon contended that its former employees are misinformed, asserting that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing “the world’s best personal assistant.”