Amazon’s initiative to profit from its Alexa-enabled devices has not met expectations and has reportedly resulted in significant financial losses for the company. According to internal documents and sources familiar with the situation, Amazon lost over $25 billion between 2017 and 2021 on products like the Echo and Kindle.
Despite having hundreds of millions of customers using its devices, data suggests that Alexa’s features are mainly utilized for basic tasks, such as setting alarms, rather than shopping on Amazon. A former senior employee expressed concerns about the value of the investment, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon’s CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved in the project have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized that the company’s focus is on creating value for customers beyond just selling devices, and they highlighted the profitability of various businesses within the Devices & Services organization.
Additionally, reports indicate that Amazon’s new AI-enhanced version of Alexa, revealed in September, is still under development and may not be ready soon. Concerns have been raised about the company’s access to necessary data and hardware, as Amazon shifts its focus to generative AI for its cloud computing branch, Amazon Web Services.
In response to critiques from former employees, Amazon defended its AI efforts, stating that the Amazon Artificial General Intelligence team has access to the required hardware and remains committed to developing an advanced personal assistant.