Amazon’s strategy to profit from its Alexa-enabled devices has not succeeded as expected, leading to a reported loss of over $25 billion between 2017 and 2021. According to internal documents and sources familiar with the situation, the company has not seen significant financial returns from products like Echo and Kindle.
Despite having hundreds of millions of customers for these devices, the use of Alexa-enabled Echo speakers tends to be more focused on simple tasks like setting alarms, rather than driving shopping activity on Amazon.
A former senior Amazon employee expressed concerns about the company’s workforce expansion, suggesting that the resources have been used to create features that do not translate into sales.
In response, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid tier for its voice assistant. However, some engineers reportedly doubt that this change will significantly improve the situation.
An Amazon spokesperson stated that the company prioritizes the overall value created for customers using its services, rather than solely focusing on device sales. They emphasized that the Devices & Services division has generated profitable business opportunities for Amazon.
In addition, Amazon’s new AI-powered version of Alexa, which was showcased in September, is allegedly not yet fully developed, as former employees have indicated a lack of necessary data and the required chip technology to support its advanced features. The company is also said to be shifting its focus toward enhancing generative AI for its cloud division, Amazon Web Services.
Amazon refuted claims made by former employees, asserting that the current AI projects receive adequate resources, including access to specialized chips and GPUs. The company reiterated its commitment to developing what it aims to be the world’s leading personal assistant.