Amazon’s ambition to generate revenue through its Alexa-enabled devices appears to be falling flat, with reports indicating the company has lost billions in this endeavor. According to the Wall Street Journal, internal documents and sources familiar with the situation reveal that Amazon’s Echo, Kindle, and other related devices have resulted in over $25 billion in losses between 2017 and 2021.
Despite having hundreds of millions of customers using its devices, many rely on Alexa-enabled Echo speakers primarily for basic functions like setting alarms rather than for shopping purposes. 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 CEO Andy Jassy is reportedly exploring solutions, including the introduction of a subscription model for its voice assistant. However, some engineers involved in developing this paid version have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company’s focus is on the value generated through customer engagement with its services rather than solely device sales. They noted that the Devices & Services sector has successfully established several profitable ventures.
In addition, Amazon’s newly unveiled AI-powered Alexa, demonstrated in September, is said to be far from ready, according to former employees. They cited a lack of sufficient data and access to necessary processing chips as barriers. Furthermore, it seems Amazon has shifted its priorities to concentrate on developing generative AI for its cloud services division, Amazon Web Services.
Amazon has rebutted claims from former employees, asserting that their insights on the Alexa AI initiative are misguided. The company insists that its Artificial General Intelligence team has the resources needed to advance the Alexa project and is committed to its goal of creating the world’s leading personal assistant.