Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of customers using these devices, the primary functions of Alexa-enabled Echo speakers seem to be limited to setting alarms and utilizing free apps, rather than facilitating purchases on Amazon.
A former senior Amazon employee expressed concerns about the company’s focus on its product development, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
Currently, Amazon CEO Andy Jassy is seeking solutions to improve the situation, which includes the introduction of a paid tier for its voice assistant. However, some engineers working on this paid version are skeptical about its potential impact.
In a statement, an Amazon spokesperson emphasized the company’s focus on creating value through its services, stating that the Devices & Services division has established several profitable ventures and is positioned for future success.
On another note, Amazon’s new AI-powered version of Alexa, showcased in September, reportedly is not yet ready, according to former employees. The company is said to lack sufficient data and the necessary chips to operate the large language model that would support this upgraded assistant. Amazon has also shifted its priorities towards developing generative AI for its cloud computing division, Amazon Web Services.
In response to criticisms, Amazon stated that the claims made by former employees are inaccurate and that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reassured that its objective for Alexa remains unchanged: to create the world’s best personal assistant.