Amazon’s strategy to monetize its Alexa-enabled devices has reportedly backfired, causing the company to lose billions. According to the Wall Street Journal, the online retail giant incurred losses exceeding $25 billion on its Echo, Kindle, and other devices from 2017 to 2021, based on internal documents and insights from unnamed sources.
Despite having hundreds of millions of users, Amazon’s Echo speakers are primarily utilized for basic functions like setting alarms and accessing free applications, rather than facilitating shopping on the platform. A former senior employee expressed concern over the company’s hiring practices, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these losses, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the project have expressed doubts about its potential impact.
An Amazon spokesperson emphasized that the company prioritizes the value delivered through its services rather than solely through device sales. They noted that the Devices & Services division has generated multiple profitable ventures for Amazon and is positioned for future success.
In addition, Amazon’s newly announced AI-enhanced version of Alexa, showcased in September, is reportedly facing significant readiness issues, according to former employees. The company lacks sufficient data and the necessary chips to support the advanced language model for the new assistant. Reports indicate that Amazon has shifted focus toward developing generative AI for its cloud computing branch, Amazon Web Services.
Amazon refuted claims made by former employees regarding its AI initiatives, asserting that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s commitment to developing an exceptional personal assistant remains unchanged.