Amazon’s efforts to profit from its Alexa-enabled devices appear to be faltering, leading to significant financial losses for the company. Reports indicate that from 2017 to 2021, Amazon lost over $25 billion on products such as the Echo and Kindle, according to internal documents and sources familiar with the situation cited by the Wall Street Journal. Despite having hundreds of millions of customers for its devices, Echo speakers are primarily used for basic functions like setting alarms, rather than driving shopping activity on Amazon.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the ongoing challenges, Amazon CEO Andy Jassy is seeking solutions, which may include the introduction of a paid version of Alexa. However, some engineers involved with the paid version reportedly doubt its potential impact.
An Amazon spokesperson emphasized the focus on value creation from service usage rather than just device sales, claiming that the Devices & Services division has successfully established multiple profitable businesses and is positioned for future success.
In addition, the development of a new AI-driven version of Alexa, which was showcased in September, is reportedly lagging behind schedule. Former employees have stated that the company lacks sufficient data and necessary chips for the large language model that underpins the upgraded assistant. Furthermore, Amazon has allegedly shifted its priorities away from Alexa AI to enhance its generative AI applications within Amazon Web Services.
Amazon has contested these claims from former staff, asserting that they are misinformed regarding its current AI initiatives for Alexa. The company stated that its Artificial General Intelligence team has access to crucial resources, including their proprietary Trainium chips and Nvidia GPUs, reaffirming its commitment to creating “the world’s best personal assistant.”