Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, costing the company billions. According to internal documents and sources familiar with the situation, the online retail giant incurred losses exceeding $25 billion from its Echo, Kindle, and similar devices between 2017 and 2021. While Amazon boasts hundreds of millions of customers using its devices, the majority of usage for its Echo speakers revolves around simple tasks, such as setting alarms and accessing free applications, rather than making purchases through the platform.
A former senior Amazon employee expressed concern, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” reflecting the disconnection between the investment in Alexa and its practical use.
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the launch of a subscription-based model for the voice assistant. However, some engineers involved with this new version of Alexa harbor doubts about its potential impact.
An Amazon spokesperson emphasized that the company is focused on the value created for customers beyond just device sales. They stated that the Devices & Services division has established several profitable ventures for Amazon and is well-positioned for future success.
Additionally, Amazon’s recently unveiled AI-powered Alexa is allegedly not close to being operational, according to former employees. The company reportedly lacks sufficient data and access to the necessary chips for running the advanced language models that would enhance the new assistant. Moreover, Amazon has reportedly shifted its priorities towards developing generative AI for its cloud computing sector, Amazon Web Services.
In response to these claims, Amazon has rejected the assertions made by former employees, asserting that the Amazon Artificial General Intelligence team has access to all required resources, including in-house Trainium chips and Nvidia GPUs. The company maintains that its goal for Alexa remains consistent: to create the world’s leading personal assistant.