Amazon’s endeavor 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 matter, the tech giant has lost over $25 billion on devices such as the Echo and Kindle from 2017 to 2021.
Despite boasting hundreds of millions of customers, data suggests that users primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms, rather than for shopping purposes. A former senior Amazon employee expressed concern about the situation, highlighting that the company has hired thousands of staff yet created a device primarily capable of functioning as a timer.
In response, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for Alexa. However, sources indicated that some engineers working on this initiative are doubtful that it will lead to significant revenue improvement.
An Amazon spokesperson emphasized the company’s commitment to delivering value to customers, stating that the Devices & Services organization has built several profitable ventures and is well-prepared for future success.
In addition, reports have emerged suggesting that Amazon’s new AI-powered version of Alexa, showcased in September, is not yet ready for deployment. Former employees claim the company lacks sufficient data and chip access necessary for the advanced technology. Moreover, it appears Amazon has shifted its focus towards generative AI development for its cloud services division, Amazon Web Services, rather than refining Alexa.
Amazon countered these claims, asserting that former employees have a limited understanding of its current AI initiatives. The company clarified that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs, reiterating its ambition to create the best personal assistant available.