Amazon’s initiative to profit from its Alexa-enabled devices appears to have fallen short, resulting in substantial financial losses for the company. Reports indicate that from 2017 to 2021, Amazon lost over $25 billion on its Echo, Kindle, and related devices, as highlighted by internal documents and insights from sources familiar with the situation.
Despite having hundreds of millions of customers using these devices, the Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms, rather than shopping through Amazon. A former senior Amazon employee expressed concerns over the company expanding its workforce to develop what may only serve as a “smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved in this project have shared their skepticism about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value derived from services provided to customers, rather than solely on device sales. They pointed out that the Devices & Services division has established various profitable ventures and is expected to continue this trend.
Additionally, concerns have been raised about the readiness of Amazon’s new AI-powered Alexa, which was showcased in September. Former employees have indicated that the company lacks the necessary data and access to the chips needed for the advanced large language model that would support this new version. Furthermore, it seems Amazon has shifted its priorities, focusing on developing generative AI for its cloud computing division, Amazon Web Services, rather than advancing the AI-powered Alexa.
Amazon has refuted claims made by its former employees, asserting that they are misinformed regarding the current advancements in Alexa’s AI capabilities and that the company has adequate access to both proprietary Trainium chips and Nvidia GPUs. The company’s objective, they maintain, is to create the world’s best personal assistant.