Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly fallen short, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, The Wall Street Journal revealed that Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers for its devices, users primarily utilize the Alexa-enabled Echo speakers for tasks such as setting alarms and accessing free applications rather than making purchases on Amazon.
A former senior employee expressed concerns about the company’s hiring practices, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in developing this paid version remain skeptical about its potential impact.
In a statement shared with Quartz, an Amazon representative emphasized the company’s focus on the value created for customers using its services, rather than solely on device sales. The representative noted that the Devices & Services organization has successfully established various profitable ventures for Amazon and is positioned to continue doing so.
Meanwhile, Amazon’s new AI-powered Alexa, showcased in September, is said to be far from complete, according to former employees. Reports indicate the company lacks sufficient data and access to the necessary chips to operate the large language model that will drive the updated virtual assistant. Additionally, it has been claimed that Amazon has deprioritized the AI-powered Alexa in favor of advancing generative AI capabilities for its cloud computing division, Amazon Web Services.
Amazon has countered these claims, asserting that former employees are misinformed regarding its current AI ambitions. The company maintains that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reiterating its commitment to creating “the world’s best personal assistant.”