Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded the expected results, leading to significant financial losses for the company. Reports indicate that between 2017 and 2021, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices, as noted by the Wall Street Journal, which cited internal documents and sources familiar with the situation. Although Amazon boasts a vast user base for its devices, Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms, rather than for making purchases on Amazon.
Concerns over the effectiveness of this strategy were highlighted by a former senior employee who remarked, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon’s CEO Andy Jassy is reportedly exploring solutions, including the launch of a subscription-based tier for the voice assistant. However, some engineers on the Alexa team reportedly express skepticism about the potential impact of this move.
An Amazon spokesperson emphasized the company’s focus is on creating value for customers when they use its services, rather than solely when they purchase devices. The spokesperson noted that the Devices & Services division has successfully established several profitable businesses.
Additionally, concerns have been raised regarding the readiness of Amazon’s newly developed AI-powered Alexa, which was introduced in a recent demonstration. Former employees suggest that Amazon lacks the required data and computing resources to support the advanced language model behind the new assistant. The company has also shifted its priorities towards developing generative AI for its cloud computing arm, Amazon Web Services.
Amazon has countered claims from former employees, asserting that they are misinformed about the current status of its AI initiatives and that the Amazon Artificial General Intelligence team has sufficient access to essential technology, including in-house chips and Nvidia GPUs. The company reiterated its commitment to developing the best personal assistant in the market.