Amazon’s strategy to generate revenue through its Alexa-enabled devices appears to have fallen short, leading to significant financial losses for the company. Reports indicate that between 2017 and 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices, based on internal documents and sources familiar with the situation. Despite boasting hundreds of millions of customers for its devices, the Echo speakers are primarily utilized for basic functions like setting alarms and using free apps, rather than making purchases on Amazon.
A former senior employee expressed concern, 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 actively seeking solutions, including the introduction of a paid tier for its voice assistant. However, unnamed sources indicated that some engineers involved in developing the paid version of Alexa are skeptical about its potential impact on revenue.
An Amazon spokesperson emphasized that the company’s focus extends beyond device sales, highlighting the value created through the use of its services. They noted that the Devices & Services division has successfully established various profitable businesses and is poised for future success.
Additionally, concerns have emerged regarding the readiness of Amazon’s new AI-powered Alexa, which was showcased in September. Former employees claim that the company lacks sufficient data and access to the necessary chips for operating the large language model that would power the upgraded assistant. Reports suggest that Amazon has shifted its priorities towards generative AI development for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon asserted that its former employees are misinformed regarding the progress of its AI initiatives, and stated that the Amazon Artificial General Intelligence team has the required access to both in-house Trainium chips and Nvidia GPUs. The company’s vision for Alexa remains unchanged, aiming to build “the world’s best personal assistant.”