Amazon’s strategy to generate revenue from its Alexa-enabled devices has not been successful, leading to substantial financial losses for the company. Reports indicate that Amazon lost more than $25 billion on devices like the Echo and Kindle between 2017 and 2021, based on internal documents and insights from unnamed sources.
Despite having hundreds of millions of customers, the Alexa-powered Echo speakers are primarily utilized for simple tasks such as setting alarms and using free applications rather than for making purchases through Amazon.
A former senior employee noted, “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 seeking solutions, including the introduction of a paid tier for the voice assistant. However, some engineers involved in developing this paid version express skepticism about its potential success.
An Amazon spokesperson pointed out that the company’s focus lies in the value generated from services used by customers beyond device purchases. They noted that the Devices & Services division has established various profitable ventures and is positioned for future growth.
On another note, Amazon’s new AI-enhanced Alexa, showcased in September, is reportedly still in developmental stages, with former employees suggesting that the necessary data and hardware to support the new large language model are lacking. The company is said to have shifted its emphasis toward generative AI projects for its cloud computing unit, Amazon Web Services.
In defense of its current initiatives, Amazon dismissed claims made by its former employees, asserting that its Artificial General Intelligence team has access to essential resources, including its in-house Trainium chips and Nvidia GPUs. The company reaffirmed its vision to develop “the world’s best personal assistant” through its Alexa platform.