Amazon’s strategy to profit from its Alexa-enabled devices appears to be failing, leading to substantial financial losses for the company. Reports indicate that the online retail giant lost over $25 billion between 2017 and 2021 due to its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation.
Despite boasting hundreds of millions of users, it seems that buyers mainly utilize Alexa-enabled Echo speakers for basic tasks like setting alarms rather than for shopping on Amazon. A former senior Amazon employee expressed concern, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these setbacks, CEO Andy Jassy is exploring options to revamp the business model, including the introduction of a paid version of the voice assistant. However, some engineers working on this initiative have voiced doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company is focused on the value generated through customer engagement with services, not solely on device sales. They stated that the Devices & Services division has created numerous profitable ventures and remains well-positioned for future growth.
On a related note, Amazon’s new AI-enhanced Alexa, which was demonstrated in September, is reportedly far from ready. Former employees have raised concerns about the lack of necessary data and chips to support the advanced technology. Additionally, Amazon has prioritized development of generative AI for its cloud computing platform, Amazon Web Services, over enhancing Alexa.
In response to these claims, Amazon refuted the assertions from former staff, insisting that the Amazon Artificial General Intelligence team has access to both in-house chips and Nvidia GPUs, and that the goal remains to develop the world’s best personal assistant.