Amazon’s efforts to profit from its Alexa-enabled devices have reportedly resulted in significant financial losses for the company, amounting to over $25 billion from 2017 to 2021, according to internal documents and sources familiar with the situation. Despite having hundreds of millions of users for its Echo, Kindle, and other devices, usage patterns indicate that the Alexa-enabled speakers are primarily utilized for basic tasks such as setting alarms and using free applications rather than for shopping on Amazon.
A former senior employee expressed concerns over the investment made in hiring and developing technology that has not yielded the expected returns. In response, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid subscription service for Alexa. However, some engineers involved in this project remain skeptical about its potential success.
An Amazon spokesperson stated the company is prioritizing the value derived from its services over just device sales, highlighting that its Devices & Services division has created several profitable ventures.
In addition, reports suggest that Amazon’s new AI-enhanced version of Alexa, showcased last month, is still far from completion. Former employees indicated that the company lacks sufficient data and resources, particularly regarding the necessary chips to support the advanced language model. Furthermore, Amazon is said to be shifting its focus toward generative AI for its cloud arm, Amazon Web Services.
In response to these criticisms, Amazon refuted claims made by former employees, asserting that its Artificial General Intelligence team has access to essential computing resources. The company reiterated its commitment to building “the world’s best personal assistant” with Alexa.