Amazon’s strategy to profit from its Alexa-enabled devices has reportedly faltered, costing the company billions of dollars. According to the Wall Street Journal, which cites internal documents and sources familiar with the situation, Amazon incurred losses exceeding $25 billion from 2017 to 2021 on its Echo, Kindle, and other devices. While the retail giant has attracted hundreds of millions of users to its devices, the Echo speakers are primarily used for basic functions like setting alarms rather than generating sales through shopping on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for its voice assistant. However, there are reservations among engineers about whether this move will yield significant results.
An Amazon spokesperson emphasized, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” highlighting the establishment of several profitable ventures within its Devices & Services organization.
In addition, Amazon’s new AI-enhanced Alexa, showcased in September, is reportedly still far from completion, according to former employees. The company lacks sufficient data and resources, including the necessary chips, to effectively operate the large language model that powers the new version. Amazon has also shifted its priorities towards developing generative AI for its cloud computing branch, Amazon Web Services.
In response to these claims, Amazon refuted the comments from former employees, stating that they are misinformed about the current state and capabilities of Alexa’s AI initiatives. The company maintains that its commitment remains focused on developing the best personal assistant in the world.