Amazon’s strategy to profit from its Alexa-enabled devices has reportedly resulted in significant financial losses, with estimates exceeding $25 billion from 2017 to 2021, according to internal documents and sources familiar with the information. Although Amazon has attracted hundreds of millions of customers to its devices, many users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms rather than making purchases.
Former employees expressed concerns over the company’s investment in these devices, with one noting that despite hiring numerous staff, the results have not met expectations. In response to these challenges, CEO Andy Jassy is seeking solutions, including the introduction of a paid version of Alexa. However, some engineers worry that this initiative may not achieve the desired outcomes.
An Amazon spokesperson emphasized that the company prioritizes the value created through customer interactions with its services, rather than solely focusing on device sales. They indicated that the Devices & Services division has successfully established numerous profitable ventures.
In addition, reports suggest that Amazon’s new AI-enhanced Alexa, showcased in September, is far from completion. Former employees have raised concerns about the lack of data and the necessary chips to support the advanced large language model. The company is allegedly shifting its focus toward developing generative AI for Amazon Web Services, its cloud computing arm.
Amazon has countered these claims, asserting that the observations of former employees are misguided. The company maintains that its team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to creating the best personal assistant possible.