Amazon’s efforts to profit from its Alexa-enabled devices have reportedly resulted in significant financial losses for the company, amounting to billions of dollars. Between 2017 and 2021, the online retail giant reportedly lost over $25 billion on products such as the Echo and Kindle, according to internal documents and sources familiar with the situation. Although Amazon boasts hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers are primarily utilized for setting alarms and other free applications, rather than for shopping.
A former senior employee remarked on the issue, expressing concerns over the workforce expansion and the lack of return on investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon’s CEO Andy Jassy is exploring solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved in developing this paid version doubt its potential to generate significant revenue.
An Amazon spokesperson emphasized the company’s commitment to creating value beyond just hardware sales, stating that the Devices & Services division has established several profitable ventures and is positioned for continued success.
In addition, Amazon’s newly showcased AI-powered Alexa, which was demonstrated in September, is reportedly not close to being ready for the market, according to former employees. They claim that a lack of sufficient data and necessary chip resources for the large language model (LLM) has slowed progress. The company is reportedly reallocating resources to prioritize generative AI for its Amazon Web Services division.
Amazon refuted claims from its former employees, asserting that they are misinformed about the current state of Alexa’s AI development. The company stated that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs, reinforcing its goal to create “the world’s best personal assistant.”