Amazon’s strategy to generate revenue from its Alexa-enabled devices appears to be falling short, with estimates indicating that the company has incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. This information comes from internal documents and sources close to the situation, as reported by the Wall Street Journal. Despite Amazon reporting hundreds of millions of customers using its devices, the Echo speakers are primarily used for basic functions such as setting alarms and utilizing free applications, rather than shopping on Amazon.
A former senior employee expressed concerns about the effectiveness of the investment in developing smart assistants, 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 subscription-based tier for the Alexa service. However, some engineers at Amazon remain skeptical about whether this new version will lead to significant improvements.
An Amazon spokesperson emphasized the company’s focus on creating value through its services, rather than just the sale of devices. They mentioned that the Devices & Services division has successfully established multiple profitable business segments and is positioned for continued success.
Meanwhile, reports suggest that the new AI-enhanced version of Alexa, which was showcased in September, is far from being ready for launch. Former employees have indicated that Amazon is currently lacking sufficient data and access to the necessary chips to support the advanced language model underpinning the updated assistant. Additionally, the company has reportedly shifted its priorities toward developing generative AI technology for its cloud services division, Amazon Web Services.
In response to these claims, Amazon has stated that its former employees are misinformed regarding their current AI projects. The company maintains that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reiterating its commitment to developing “the world’s best personal assistant” through Alexa.