Amazon’s strategy to profit from its Alexa-enabled devices is reportedly backfiring, leading the company to lose billions of dollars. According to internal documents reviewed by the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers using these devices, it appears that many utilize the Alexa-enabled Echo speakers primarily for functions like setting alarms and accessing free apps, rather than for shopping.
A former senior Amazon employee expressed concern, stating, “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, which may involve introducing a paid tier for the voice assistant. Nonetheless, some engineers involved in this project are skeptical about its potential impact.
An Amazon spokesperson clarified the company’s approach: “We are focused on the value we create when customers use our services, not just when they buy our devices.” The spokesperson added that the Devices & Services division has managed to establish several profitable ventures for Amazon and is poised to continue doing so.
In addition, Amazon recently showcased a new AI-enhanced version of Alexa, but former employees indicated that it is far from ready for launch. Concerns have been raised regarding the company’s access to necessary data and chip technology to support the advanced capabilities of the large language model (LLM) behind the new assistant. Furthermore, it has been reported that Amazon has shifted its focus towards developing generative AI for its cloud computing segment, Amazon Web Services.
In response to these allegations, Amazon countered that the claims from former employees are misguided. The company asserted that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs. Amazon reiterated its commitment to developing an exceptional personal assistant through Alexa.