Amazon’s efforts to profit from its Alexa-enabled devices have reportedly backfired, resulting in significant losses for the company. Between 2017 and 2021, Amazon incurred over $25 billion in losses related to its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation.
Despite having hundreds of millions of customers for its devices, Amazon’s Echo speakers are primarily used for basic functions like setting alarms, rather than shopping on Amazon. A former senior employee expressed concerns about the effectiveness of the investments, 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, including the introduction of a paid version of the Alexa service. However, some engineers working on this initiative have expressed skepticism about its potential impact, according to reports.
An Amazon spokesperson emphasized the company’s focus on providing value through its services rather than solely relying on device sales. They noted that the Devices & Services organization has successfully established several profitable businesses.
In addition, the latest AI-enhanced version of Alexa demonstrated in September reportedly remains underdeveloped, with former employees citing insufficient data and lack of access to necessary processing chips. Amazon is said to have shifted its focus toward developing generative AI for its cloud computing unit, Amazon Web Services.
Amazon has countered claims from former employees, asserting that its Artificial General Intelligence team has access to the required resources, including in-house Trainium chips and Nvidia GPUs. The company remains committed to its goal of creating “the world’s best personal assistant.”