Amazon’s strategy to generate revenue from its Alexa-enabled devices appears to be faltering, leading to substantial financial losses for the company. Reports indicate that between 2017 and 2021, Amazon lost over $25 billion on its Echo, Kindle, and other devices, according to the Wall Street Journal, which referenced internal documents and sources familiar with the situation. Although Amazon boasts hundreds of millions of customers for these products, data suggests that many use the Echo speakers primarily for basic functions like setting alarms rather than for shopping.
A former senior Amazon employee expressed concerns about the company’s hiring practices, remarking, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is reportedly exploring a solution by introducing a paid tier for Alexa. However, some engineers involved in this project have expressed doubts about its potential effectiveness, as documented by the Wall Street Journal.
An Amazon spokesperson challenged these negative assessments, emphasizing the company’s focus on creating value for customers beyond merely selling devices. They claimed that Amazon’s Devices & Services division has established multiple profitable ventures and is poised for future success.
Additionally, former employees have indicated that the new AI-powered version of Alexa, showcased in September, may not be as advanced as anticipated. Sources have pointed out that the company lacks sufficient data and necessary chips to support the large language model driving this update. Furthermore, Amazon has reportedly shifted its priorities to concentrate on generative AI for its Amazon Web Services division.
In a rebuttal, Amazon stated that these former employees are misinformed regarding its Alexa AI initiatives, asserting that the company’s Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Amazon reaffirmed its commitment to building “the world’s best personal assistant.”