Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021. According to internal documents and sources familiar with the situation, the company’s Echo, Kindle, and other device segments have not performed as expected. While Amazon has attracted hundreds of millions of customers to its devices, it appears that the Alexa-enabled Echo speakers are predominantly used for basic functions like setting alarms rather than driving sales on Amazon’s platform.
A former senior employee expressed concerns about the company’s heavy investment, noting that despite hiring 10,000 staff, the primary utility of the device has been limited to simple tasks. In response, Amazon’s CEO, Andy Jassy, is reportedly seeking solutions, including the rollout of a paid version of Alexa. However, there are doubts among engineers about the effectiveness of this approach.
An Amazon spokesperson commented that the company is concentrating on the value created from customer engagement with its services, rather than solely on device sales. They asserted that the Devices & Services division has established multiple profitable ventures and is positioned to continue this trend.
Meanwhile, reports indicate that the new AI-enhanced version of Alexa, which was showcased in September, is still not ready for launch. Concerns have been raised regarding the lack of data and the necessary technology to support the advanced language model powering the new assistant. Amazon has reportedly shifted focus towards developing generative AI for its cloud services, Amazon Web Services, rather than prioritizing the new Alexa.
Amazon has countered claims from former employees, asserting that the current AI initiatives for Alexa are on track and that the Amazon Artificial General Intelligence team has access to essential resources, including in-house chips and Nvidia GPUs. The company affirmed its commitment to creating the world’s leading personal assistant.