Amazon’s strategy to profit from its Alexa-enabled devices appears to have fallen short, reportedly costing the company billions. Internal documents cited by the Wall Street Journal indicate that Amazon incurred losses exceeding $25 billion from products like Echo and Kindle between 2017 and 2021. Despite boasting hundreds of millions of customers, many use the Alexa-enabled Echo speakers primarily for functions like setting alarms rather than for shopping.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the underperformance, CEO Andy Jassy is exploring solutions, including the introduction of a paid version of Alexa. However, sources have indicated some engineers are skeptical about the potential impact of this new offering.
An Amazon spokesperson emphasized the company’s focus on the value generated from its services and insisted that the Devices & Services organization has successfully established profitable ventures, with more expected in the future.
Additionally, reports suggest that Amazon’s advancements in artificial intelligence for Alexa are not as advanced as claimed. Former employees noted that the company lacks sufficient data and necessary chips to operate the new large language model intended for the virtual assistant. Furthermore, Amazon is prioritizing generative AI development for its cloud division, Amazon Web Services, over advancements in Alexa.
In response, Amazon dismissed the claims from former employees, asserting that the Amazon Artificial General Intelligence team has access to the required chips and is committed to developing a leading personal assistant.