Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in substantial financial losses for the company. According to the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Despite attracting hundreds of millions of customers to its devices, the Echo speakers are primarily utilized for basic functions like setting alarms rather than for making purchases 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 these challenges, Amazon’s CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of Alexa. However, some engineers involved in this paid version remain skeptical about its potential impact.
An Amazon spokesperson emphasized that the company prioritizes the value created for customers when using its services beyond mere device sales, highlighting that its Devices & Services division has developed several profitable ventures and is positioned for future success.
In addition, Amazon’s new AI-enhanced version of Alexa, showcased in September, is reportedly not fully prepared, according to former employees. The company faces challenges in acquiring sufficient data and the necessary chips for the large language model driving the new assistant. Furthermore, Amazon is said to have shifted its focus from developing AI for Alexa to advancing generative AI in its cloud computing division, Amazon Web Services.
In response to these claims, Amazon contested the accuracy of its former employees’ statements, asserting that its Artificial General Intelligence team has access to important resources, including its own Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to creating what it aims to be “the world’s best personal assistant.”