Amazon’s efforts to generate profit from its Alexa-enabled devices have reportedly fallen short, resulting in substantial losses for the company. According to a report from the Wall Street Journal, which cites internal documents and unnamed sources, Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. Despite hundreds of millions of customers using these devices, the Echo speakers are primarily utilized for basic tasks like setting alarms, rather than driving sales on Amazon’s platform.
A former senior Amazon employee expressed concern about the situation, highlighting that the company had invested heavily in personnel and technology but might be focusing on trivial functionalities.
In response to the challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid subscription tier for Alexa. However, some engineers working on this initiative fear it may not yield significant results.
An Amazon spokesperson emphasized the company’s focus on the value generated through customer interactions with their services, rather than solely device sales. They asserted that the Devices & Services division has established several profitable ventures and is positioned for continued success.
Furthermore, Amazon’s new AI-enhanced version of Alexa, demonstrated in September, is said to be far from completion, according to former employees. Reports indicate that the company lacks the necessary data and semiconductor resources to support the large language model intended for the updated virtual assistant, leading to a distraction from Alexa in favor of advancing generative AI for Amazon Web Services.
Nevertheless, Amazon has countered claims from former employees, stating they are misinformed about the progress of its AI initiatives. The company asserts that its Artificial General Intelligence team has access to proprietary Trainium chips and Nvidia graphics processing units, maintaining its commitment to creating an exceptional personal assistant with Alexa.