Amazon’s strategy for generating revenue from its Alexa-enabled devices has reportedly faltered, resulting in significant financial losses for the company. Internal documents and sources cited by the Wall Street Journal reveal that Amazon incurred more than $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Despite boasting hundreds of millions of customers, users mainly utilize Alexa-enabled Echo speakers for basic functions like setting alarms rather than making purchases on Amazon.
A former senior Amazon employee expressed concerns over the company’s expansion, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to this challenge, Amazon CEO Andy Jassy is reportedly considering the launch of a paid version of its voice assistant. However, some engineers working on this project are skeptical about its potential effectiveness.
An Amazon spokesperson defended the company’s approach, emphasizing its focus on the value created when customers use its services, rather than just through device sales. They noted that Amazon’s Devices & Services unit has established several profitable ventures and is well-positioned for future success.
In addition, Amazon’s new AI-driven version of Alexa, showcased in September, is reportedly not yet ready, according to former employees. The company lacks sufficient data and access to the necessary chips for running the anticipated large language model. Furthermore, Amazon is said to have deprioritized the development of AI for Alexa in favor of advancing generative AI initiatives within its cloud computing division, Amazon Web Services.
Amazon contends that the claims made by former employees are inaccurate and that its Alexa AI team has access to the in-house Trainium chips and Nvidia GPUs needed for their advancing projects. The company remains committed to its goal of creating the world’s best personal assistant.