Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly not been successful, leading to substantial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and related devices between 2017 and 2021.
Despite attracting hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms rather than for shopping on Amazon. A former senior Amazon employee expressed concerns, saying, “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 seeking solutions and is said to be introducing a paid tier for its voice assistant. However, some engineers involved in the development of this paid version doubt its efficacy.
An Amazon spokesperson emphasized the company’s commitment to creating value beyond just device sales, claiming that its Devices & Services division has established several profitable businesses and is well-positioned for continued success.
Meanwhile, reports suggest that Amazon’s new AI-powered Alexa, unveiled in September, is not yet ready for release. Former employees indicated that the company lacks adequate data and access to the necessary hardware, like chips, to support the large language model driving the new assistant. Additionally, Amazon has reportedly shifted its focus away from the AI-powered Alexa to prioritize generative AI development for its cloud computing division, Amazon Web Services.
In response, Amazon has countered claims from former employees, stating that the Amazon Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia GPUs. The company reiterated that its ambition for Alexa remains unchanged: to create the world’s best personal assistant.