Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, internal documents and sources suggest that Amazon lost over $25 billion on its Echo, Kindle, and related devices between 2017 and 2021. Despite attracting hundreds of millions of customers, the use of Alexa-enabled Echo speakers appears to be more focused on basic functions like setting alarms rather than facilitating purchases through Amazon.
A former senior Amazon employee expressed concerns about the situation, 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 tier for the voice assistant. However, some engineers involved in developing this paid version are skeptical about its potential for success.
An Amazon spokesperson emphasized the company’s focus on the value created when customers use its services, rather than solely on device sales. They noted that the Devices & Services division has established several profitable ventures and is well-positioned for future success.
On another note, Amazon’s new AI-driven Alexa, which was showcased in September, is reportedly not near completion, as former employees claim the company lacks sufficient data and necessary chips to support the new large language model. Additionally, it has been reported that Amazon is deprioritizing the AI-enhanced Alexa in favor of advancing generative AI technology within its cloud services subsidiary, Amazon Web Services.
Amazon refuted claims from former employees, asserting they are misinformed about the current status of its Alexa AI initiatives. The company stated that the Amazon Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia GPUs, and reiterated its commitment to developing “the world’s best personal assistant.”