Amazon’s strategy to generate revenue from its Alexa-enabled devices has not been effective, leading to significant financial losses for the company. Reports indicate that Amazon lost over $25 billion on its Echo, Kindle, and similar devices from 2017 to 2021, according to internal documents and sources familiar with the situation. Despite having hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for functions like setting alarms and using free apps, rather than facilitating purchases on Amazon.
A former senior Amazon employee expressed concerns about the situation, highlighting the extensive hiring of personnel only to produce limited utility. In response, CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers involved in the project are skeptical about its potential success.
An Amazon spokesperson stated that the company emphasizes creating value for customers through its services rather than focusing solely on device sales. They noted that the Devices & Services organization has established profitable businesses and is positioned for future growth.
Additionally, Amazon’s new AI-powered version of Alexa, showcased in September, is reportedly not yet ready for launch, according to former employees. The company reportedly lacks sufficient data and the necessary chips to operate the large language model that would support this upgraded assistant. Instead, Amazon has prioritized generative AI development for its cloud computing division, Amazon Web Services.
In response to the criticisms, Amazon asserted that the claims of former employees about its AI efforts are inaccurate and that its Artificial General Intelligence team has the required resources, including access to their proprietary Trainium chips and Nvidia GPUs. The company’s commitment to developing the “world’s best personal assistant” for Alexa remains unchanged.