Amazon’s strategy to generate revenue through its Alexa-enabled devices appears to be falling short, leading to significant financial losses. According to reports, the tech giant lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021, as indicated by internal documents and sources familiar with the matter. Although Amazon boasts hundreds of millions of customers, its Echo speakers are primarily used for non-shopping tasks, such as setting alarms and accessing free apps.
A former senior Amazon employee expressed concern about the investments made, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers in the Alexa division reportedly believe that this change may not yield the desired impact.
An Amazon spokesperson emphasized the company’s focus on the value created through its services rather than solely on device sales, stating that the Devices & Services organization has established several profitable ventures and is poised to continue this trend.
Additionally, concerns have been raised regarding the readiness of Amazon’s new AI-powered Alexa, showcased in September. Former employees suggest that the necessary data and processing capabilities to support the large language model (LLM) have not been adequately developed. The company is also said to have shifted its priorities toward generative AI initiatives within its cloud computing arm, Amazon Web Services.
Amazon refuted the claims from former employees, insisting that its Alexa AI efforts are on track and that the Amazon Artificial General Intelligence team has access to the required resources, including in-house Trainium chips and Nvidia GPUs. The company maintains its commitment to building “the world’s best personal assistant.”