Amazon’s efforts to profit from its Alexa-enabled devices have not succeeded as planned, reportedly resulting in billions in losses for the company. According to the Wall Street Journal, internal documents reveal that Amazon lost over $25 billion from devices such as the Echo and Kindle between 2017 and 2021. Despite having hundreds of millions of customers, the primary use for the Alexa-enabled Echo speakers has been for basic functions like setting alarms rather than making purchases on Amazon.
A former senior employee commented on the situation, expressing concern about the company’s hiring practices and the functionality of the devices, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid tier for the Alexa service. However, some engineers are skeptical about the potential impact of this change.
An Amazon spokesperson emphasized the company’s focus on the overall value created for customers, asserting that its Devices & Services organization has already established various profitable ventures and is positioned for future success.
Additionally, concerns have been raised about the readiness of the newly developed AI-powered version of Alexa. Former employees have indicated that the necessary data and technology, including the appropriate chips to support the advanced large language model, are insufficient. It appears that Amazon has shifted its priority to enhancing generative AI capabilities within its cloud computing division, Amazon Web Services.
Amazon has refuted claims made by its former employees, stating that they lack accurate information about the current status of its Alexa AI initiatives. The company asserts that its Artificial General Intelligence team has access to essential technology, including in-house Trainium chips and Nvidia GPUs, and remains committed to creating “the world’s best personal assistant.”