Amazon’s strategy to generate profits from its Alexa-enabled devices has reportedly fallen short, costing the company billions. According to a report by the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insider accounts. While the company has successfully attracted hundreds of millions of customers, its Echo speakers are primarily used for basic functions like setting alarms rather than shopping on Amazon.
Concerns have emerged from former Amazon employees, who pointed out that despite hiring 10,000 people, the company’s investments appear to yield limited returns. In response to these challenges, CEO Andy Jassy is seeking solutions, including the introduction of a paid subscription tier for Alexa. However, some engineers at Amazon are skeptical about whether this strategy will significantly impact the device’s performance.
An Amazon representative emphasized that the company is dedicated to creating value through its services, not only from device sales. The Devices & Services division has reportedly fostered several profitable businesses and is expected to continue doing so.
At the same time, developments regarding the new AI-driven Alexa have been sluggish. Former employees claim that the updated version of the assistant is not close to being ready, lacking sufficient data and essential chips necessary for its operation. Additionally, Amazon has seemingly shifted focus from the AI-enabled Alexa to enhancing generative AI for its cloud computing service, Amazon Web Services.
In response to these critiques, Amazon has stated that former employees are misinformed about the status of its Alexa AI projects, insisting that the company has access to both in-house Trainium chips and Nvidia GPUs. Amazon reaffirmed its commitment to creating what it aims to be the world’s best personal assistant.