Amazon’s efforts to profit from its Alexa-enabled devices appear to have fallen short, resulting in significant financial losses for the company. From 2017 to 2021, Amazon reportedly lost over $25 billion on its devices, including the Echo and Kindle, according to internal documents reviewed by the Wall Street Journal.
Despite boasting hundreds of millions of customers for its devices, Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms rather than for purchasing products through Amazon. A former senior employee expressed concern about the situation, highlighting that, despite significant hiring for Alexa projects, the focus has not translated into expected commercial success.
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid subscription tier for Alexa. However, some engineers have expressed skepticism about the potential impact of this initiative.
An Amazon spokesperson noted that the company’s focus is on the overall value created through its services, rather than just device sales, and emphasized the profitable ventures already established within the Devices & Services organization.
Additionally, the company’s latest AI-enhanced version of Alexa, showcased in September, is believed to be faltering in its development. Former employees indicated that Amazon lacks sufficient data and the necessary chips to support the advanced language model required for this upgrade. Furthermore, Amazon has reportedly shifted its focus away from the AI version of Alexa to prioritize generative AI projects for its cloud computing division.
In response to these claims, Amazon clarified that its former employees may not be fully informed regarding current AI initiatives, asserting that its Artificial General Intelligence team has access to advanced processing resources. The company remains committed to its goal of developing the world’s leading personal assistant.