Amazon’s strategy to generate revenue from its Alexa-enabled devices has not been successful, resulting in significant financial losses for the company. According to internal documents and sources cited by the Wall Street Journal, the retail giant incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. While Amazon boasts hundreds of millions of customers for these devices, data suggests that consumers primarily use the Alexa-enabled Echo speakers for free applications like setting alarms, rather than making purchases on Amazon.
A former senior employee voiced concerns about the investment in personnel and resources, 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 subscription service for Alexa. However, engineers working on this paid version have expressed doubts about its potential impact, according to sources.
An Amazon spokesperson emphasized the company’s focus on creating value through its services, not just device sales. They noted that the Devices & Services division has successfully established profitable ventures and is positioned for future growth.
Additionally, Amazon’s latest AI-powered Alexa, unveiled in September, is reportedly far from completion. Former employees indicated that the company lacks sufficient data and access to the necessary technology to operate the advanced language model that would enhance the assistant’s capabilities. There are also indications that Amazon has shifted its priorities towards developing generative AI for its cloud services, Amazon Web Services.
In response to these claims, Amazon has countered that its former employees are mistaken about the state of its Alexa AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both internal Trainium chips and Nvidia GPUs. The company reiterated its commitment to creating the best personal assistant in the world.