Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to recent reports, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from anonymous sources.
Despite having hundreds of millions of users for its devices, it appears that Alexa-enabled Echo speakers are primarily used for tasks such as setting alarms rather than facilitating shopping on Amazon. A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, and the company is reportedly planning to introduce a paid tier for its voice assistant. However, there are reservations among some engineers about whether this new offering will have a substantial impact.
An Amazon spokesperson stated that the company is focused on the value created from customer interactions beyond just device purchases. The spokesperson emphasized that the Devices & Services organization has successfully established several profitable ventures and is positioned to do so in the future.
Additionally, reports suggest that Amazon’s latest AI-driven version of Alexa, which was demonstrated in September, is far from being ready for launch. Former employees indicated that the company lacks sufficient data and access to the necessary technology to support the advanced language model behind the new Alexa. There are also claims that Amazon has shifted its attention from developing AI for Alexa to prioritizing generative AI for its cloud services division, Amazon Web Services.
In response to these criticisms, Amazon refuted the assertions made by former employees, asserting that the Amazon Artificial General Intelligence team possesses access to both its in-house Trainium chips and Nvidia graphics processing units (GPUs). The company reaffirmed its commitment to creating “the world’s best personal assistant.”