Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, resulting in losses amounting to billions of dollars. According to internal documents and sources familiar with the situation, the company lost over $25 billion across its Echo, Kindle, and other devices between 2017 and 2021.
Despite boasting hundreds of millions of users for its devices, data suggests that the majority of interactions with Echo speakers center around basic functions, like setting alarms, rather than shopping through Amazon. A former senior employee highlighted concerns about the company’s heavy investment in personnel and technology for a limited return, 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 solution by introducing a paid version of its voice assistant. However, some engineers involved in this project are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to creating value beyond device sales, noting that the Devices & Services organization has established multiple profitable ventures and aims to continue this trajectory.
In addition, Amazon’s latest AI-enhanced version of Alexa, showcased in September, is said to be far from ready. Reports indicate that the company lacks sufficient data and necessary chips to support the advanced large language model underlying the new assistant. Consequently, Amazon has shifted its focus toward developing generative AI for its cloud computing arm, Amazon Web Services.
In response to criticism, Amazon contended that former employees are misinformed regarding the current state of its AI initiatives. The company asserted that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs, and remains committed to its goal of creating the world’s best personal assistant.