Amazon’s strategy to profit from its Alexa-enabled devices has fallen short, resulting in significant financial losses for the company. Reports indicate that from 2017 to 2021, Amazon lost more than $25 billion on devices such as the Echo and Kindle, according to internal documents and sources familiar with the matter. Despite having hundreds of millions of customers, the Echo speakers are primarily used for basic functions like setting alarms and accessing free applications, rather than facilitating purchases on Amazon.
A former senior Amazon employee expressed concerns about the company’s investment, 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 reportedly exploring solutions, including the introduction of a paid subscription tier for Alexa. However, some engineers working on this initiative have doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value through its services while maintaining that the Devices & Services division has successfully established profitable business models.
In addition, Amazon’s ambitious plan to enhance Alexa with artificial intelligence is reportedly not as advanced as intended. According to former employees, the new AI-powered version is lagging due to insufficient data and limited access to the necessary chips for the language model. The company has also shifted its priority to developing generative AI technology for its cloud division, Amazon Web Services.
In response to these claims, Amazon disputed the accuracy of feedback from former employees, asserting that its Artificial General Intelligence team has the required access to both in-house Trainium chips and Nvidia GPUs. Amazon maintains that its objective remains to develop the best personal assistant available.