Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, the tech giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of customers using these devices, the usage patterns indicate that Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms and accessing free applications, rather than driving sales on Amazon’s platform. A former senior Amazon employee expressed concerns over the workforce expansion and product developments, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is seeking solutions and is reportedly set to introduce a paid version of the Alexa voice assistant. However, some engineers involved in the project are skeptical about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers beyond device sales, highlighting the success of its Devices & Services division.
At the same time, the new AI-enhanced version of Alexa, which was showcased in September, is believed to be far from ready, according to former employees. They pointed out that the company lacks sufficient data and the necessary chips to support the large language model driving the new assistant. Additionally, Amazon has shifted its focus toward developing generative AI for its cloud division, Amazon Web Services, rather than prioritizing the AI-powered Alexa.
In response to these claims, Amazon disputed the comments from former employees, asserting that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs, and reiterated its goal to create the best personal assistant in the world.