Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly failed, resulting in substantial financial losses for the company. From 2017 to 2021, Amazon’s Echo, Kindle, and other devices reportedly lost over $25 billion, according to internal documents and sources familiar with the situation.
Despite having hundreds of millions of users for its devices, many customers primarily use Alexa-enabled Echo speakers for basic tasks like setting alarms rather than making purchases. A former senior Amazon employee expressed concerns over the company’s investments, 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 seeking solutions and is reportedly planning to introduce a paid tier for its voice assistant. However, sources have indicated that some engineers working on this paid version of Alexa doubt its potential impact.
An Amazon spokesperson stated, “We focus on the value we create when customers use our services, not just when they buy our devices.” The spokesperson emphasized that Amazon’s Devices & Services division has established several profitable businesses and is poised to continue this momentum.
Simultaneously, Amazon’s new AI-enhanced Alexa, unveiled in September, is reportedly not yet ready for deployment. Former employees claim that the company lacks sufficient data and access to necessary chips for the large language model driving the upgraded assistant. Additionally, Amazon is said to have shifted its priorities, focusing more on generative AI for its cloud computing division, Amazon Web Services.
Amazon refuted claims from former employees, asserting that they are misinformed regarding the company’s current AI efforts. The company clarified that its artificial intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs), and reiterated its goal to create the world’s best personal assistant.