Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of customers using these devices, it appears that most users primarily rely on them for basic functions like setting alarms, rather than making purchases on Amazon. A former senior Amazon employee expressed concerns about the situation, stating, “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 and is reportedly introducing a paid subscription tier for its voice assistant. However, some engineers involved in this initiative have voiced doubts about its potential effectiveness.
An Amazon spokesperson emphasized the importance of the value created for customers when using their services, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Additionally, Amazon’s new AI-powered Alexa, which was showcased in September, is reportedly not ready for deployment. Former employees have indicated that the company lacks sufficient data and the necessary chips to support the advanced large language model for the enhanced virtual assistant. Moreover, Amazon is reportedly prioritizing generative AI development within its cloud computing division, Amazon Web Services, over the Alexa initiative.
Amazon has disputed claims made by former employees, asserting that they are misinformed regarding its current AI efforts. The company maintains that its Artificial General Intelligence team has access to the essential in-house Trainium chips and Nvidia GPUs, and that the overarching goal for Alexa continues to be the development of the world’s best personal assistant.