Amazon’s strategy to profit from its Alexa-enabled devices has reportedly faltered, resulting in significant financial losses for the tech giant. According to internal documents and sources familiar with the situation, Amazon lost over $25 billion from products like the Echo and Kindle between 2017 and 2021. Despite having hundreds of millions of customers, its Echo speakers are primarily used for simple tasks such as setting alarms, rather than for shopping.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of Alexa. However, some engineers are skeptical about its potential impact.
An Amazon spokesperson acknowledged the situation, emphasizing the company’s focus on the value created through its services rather than solely device sales. They noted that the Devices & Services organization has developed several profitable ventures and intends to sustain this momentum.
In addition, Amazon unveiled a new artificial intelligence-enhanced version of Alexa in September, but former employees indicated that it is far from ready. They highlighted a lack of data and insufficient access to the necessary chips for running the large language model that operates the new assistant. The company has also shifted its priorities towards enhancing generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon contested the assertions of its former employees, stating that the dedicated team for artificial intelligence has the resources needed, including proprietary Trainium chips and Nvidia GPUs. The company reiterated its goal: to develop the world’s leading personal assistant.