Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. From 2017 to 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices, according to the Wall Street Journal, which cited internal documents and sources familiar with the matter. Although Amazon boasts hundreds of millions of customers for its devices, the Echo speakers are primarily used for basic functions such as setting alarms rather than shopping directly on Amazon.
A former senior employee expressed concerns about the direction of innovation, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of Alexa. However, some engineers involved in the project are skeptical about its potential impact.
An Amazon spokesperson affirmed that the company is concentrating on delivering value through its services beyond the sale of devices, highlighting that its Devices & Services division has established several profitable ventures that are expected to thrive in the future.
Additionally, reports indicate that Amazon’s new AI-enhanced Alexa, showcased in a recent demonstration, is still far from completion. Insiders have noted deficiencies in data availability and access to the necessary chips to support the advanced language model for the new assistant. The company has reportedly shifted its focus toward generative AI solutions for its cloud computing arm, Amazon Web Services.
Amazon has rebutted claims from former employees, asserting that the current efforts for Alexa AI are well-resourced and that the Amazon Artificial General Intelligence team has access to in-house chips as well as Nvidia GPUs. The company reiterated its commitment to developing the “world’s best personal assistant.”