Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. From 2017 to 2021, Amazon lost over $25 billion due to investments in its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation, as reported by the Wall Street Journal. Despite having hundreds of millions of customers using these devices, the Echo speakers are primarily used for basic functions such as setting alarms, rather than driving sales on Amazon.
A former senior Amazon employee expressed concerns, suggesting that the company had hired thousands of staff only to develop a limited function. In response to these challenges, Amazon CEO Andy Jassy is exploring potential solutions, including the launch of a paid version of its voice assistant. However, some engineers involved in this initiative have reservations about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value created for customers through its services, rather than solely on device sales. They highlighted that the Devices & Services division has created several profitable ventures and is poised for future success.
However, there are reports that Amazon’s new AI-powered Alexa, showcased in September, is far from ready for rollout. Concerns have been raised by former employees over a lack of essential data and access to the necessary technology to develop the advanced language model intended for the new version of the assistant. Additionally, it appears that Amazon is prioritizing generative AI development within its cloud computing division, Amazon Web Services, over immediate improvements to Alexa.
Amazon has responded to these concerns, disputing claims by former employees and asserting that its Artificial General Intelligence team has the required access to both its proprietary Trainium chips and Nvidia graphics processing units to advance its Alexa AI initiatives. The company’s strategy for Alexa continues to aim at creating “the world’s best personal assistant.”