Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, resulting in the company losing billions. Internal documents and sources reveal that from 2017 to 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and related devices.
Despite boasting hundreds of millions of users, it appears that consumers primarily utilize Amazon’s Echo speakers for basic functions like setting alarms rather than for shopping. A former Amazon employee expressed concern about the company’s hiring spree, highlighting the paradox of investing heavily in technology that primarily serves as a “smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is reportedly considering a paid subscription offering for its voice assistant. However, some engineers involved in the development of this version doubt its potential to improve the situation.
An Amazon spokesperson emphasized the company’s focus on customer value derived from services rather than solely device sales, asserting that their Devices & Services organization has successfully established several profitable ventures.
In another development, Amazon’s new AI-driven version of Alexa, showcased in September, is reportedly not ready for launch. Sources indicate that the company lacks sufficient data and necessary hardware to support the advanced language model. Furthermore, Amazon is prioritizing the development of generative AI for its cloud services, Amazon Web Services, over enhancing the Alexa assistant.
Amazon has disputed the claims of former employees, asserting that the Amazon Artificial General Intelligence team has access to the required technology and remains committed to building the best personal assistant available.