Amazon’s strategy to profit from its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to billions of dollars for the company.
According to a report by the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Internal documents and sources familiar with the matter reveal that, while Amazon has hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers are predominantly utilized for features like setting alarms and accessing free applications, rather than shopping on Amazon.
A former senior employee expressed concern, 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 reportedly exploring solutions, including launching a paid version of its voice assistant. However, some engineers involved in this project have voiced skepticism about its potential effectiveness.
An Amazon spokesperson commented, “We’re focused on the value we create when customers use our services, not just when they buy our devices.” They emphasized that the Devices & Services division has successfully established multiple profitable business avenues and is well-positioned for future growth.
Additionally, concerns have arisen regarding the readiness of Amazon’s new AI-powered Alexa, which was demonstrated in September. Former employees have indicated that the company lacks sufficient data and access to the necessary chips for the large language model driving the new version of the virtual assistant. Furthermore, Amazon has reportedly shifted its focus from improving Alexa to enhancing generative AI capabilities for its cloud computing segment, Amazon Web Services.
In response to these claims, Amazon has refuted the statements of its former employees, asserting that they are misinformed about the current state of its Alexa AI initiatives. The company declared that its Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia graphics processing units (GPUs), reaffirming its commitment to building what it calls “the world’s best personal assistant.”