Amazon’s strategy to profit from its Alexa-enabled devices appears to be faltering, resulting in substantial financial losses for the company. According to internal documents and sources cited by the Wall Street Journal, Amazon lost more than $25 billion on its devices, including Echo and Kindle, from 2017 to 2021.
Despite boasting hundreds of millions of customers for its devices, the Alexa-enabled Echo speakers are reportedly primarily used for basic functions such as setting alarms, with far less engagement when it comes to shopping on Amazon. “We worried we’ve hired 10,000 people and we’ve built a smart timer,” shared a former senior Amazon employee.
In light of these challenges, CEO Andy Jassy is seeking solutions and is rumored to be introducing a paid subscription option for the voice assistant. However, some engineers involved in developing this paid version are skeptical about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value generated through its services, reiterating that the Devices & Services division has successfully established profitable businesses and is poised for future growth.
In addition, the new AI-powered version of Alexa, which was showcased in September, is reportedly far from ready, as noted by former employees. Amazon is said to lack sufficient data and necessary chip access for the large language model underpinning the updated assistant. Furthermore, the company has reportedly shifted its priorities towards generative AI developments within its cloud computing division, Amazon Web Services.
Amazon has contested the claims made by former employees, asserting that they are misinformed regarding the current state of its Alexa AI initiatives. The company stated that its Amazon Artificial General Intelligence team has access to both internal Trainium chips and Nvidia GPUs, with the objective of creating the leading personal assistant.