Amazon’s strategy to profit from its Alexa-enabled devices seems to have backfired, resulting in significant financial losses for the company. According to reports, Amazon has lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, as detailed by internal documents and sources familiar with the situation. Although Amazon has attracted hundreds of millions of customers to its devices, its Echo speakers are primarily used for tasks like setting alarms rather than for shopping on Amazon.
A former senior employee commented on the situation, expressing concerns about the company’s massive hiring and the limited utility of their technology. In response to these challenges, CEO Andy Jassy is reportedly exploring the introduction of a paid version of Alexa. However, some engineers at Amazon have expressed reservations about whether this initiative will actually improve the situation.
An Amazon spokesperson emphasized the company’s focus on the value created for customers using their services, rather than solely through device sales. They mentioned that the Devices & Services division has already established several profitable businesses and is well-positioned for future growth.
In addition, Amazon’s new AI-powered Alexa, which was showcased in September, is said to be far from ready for launch, according to former employees. The company is reportedly lacking sufficient data and the necessary chips to operate the advanced language model for the new version of Alexa. Furthermore, Amazon has shifted its focus from AI-powered Alexa development to prioritizing generative AI for its cloud computing platform, Amazon Web Services.
In contrast, Amazon disputes the claims made by its former employees, asserting that they are misinformed about the progress of its Alexa AI initiatives. The company maintains that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs, reaffirming its commitment to developing the best personal assistant in the world.