Amazon’s strategy to profit from its Alexa-enabled devices has reportedly not succeeded, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, Amazon incurred over $25 billion in losses related to its Echo, Kindle, and other devices from 2017 to 2021. While the company boasts hundreds of millions of customers using its devices, the Echo speakers have been primarily utilized for basic functions like setting alarms, rather than facilitating purchases.
A former senior Amazon employee expressed concerns regarding the company’s investment, indicating that despite hiring thousands of people, the return has not met expectations.
In response to these challenges, Amazon CEO Andy Jassy is exploring potential solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in this project reportedly doubt its effectiveness in changing the current trajectory.
An Amazon spokesperson emphasized that the company is centered on creating value from its services, rather than solely from device sales. They noted that the Devices & Services division has created profitable ventures and is positioned for future success.
Additionally, reports indicate that Amazon’s new AI-driven version of Alexa, which was showcased in September, is not ready for deployment. Insiders claim the company lacks sufficient data and access to the necessary hardware to support the advanced technology. Instead, Amazon has shifted its focus toward developing generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon has stated that critics are misinformed regarding its Alexa AI initiatives. The company assures that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to building a leading personal assistant.