Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in substantial financial losses for the company. According to internal documents and sources familiar with the situation, Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. While the company boasts hundreds of millions of customers for its devices, users tend to employ Echo speakers primarily for setting alarms and accessing free apps, rather than for making purchases on Amazon.
A former senior Amazon employee expressed concerns about the company’s hiring practices, 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 paid version of the Alexa voice assistant. However, some engineers working on this initiative are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services, beyond just selling devices. They noted that Amazon’s Devices & Services organization has created numerous profitable ventures and is well-positioned for future success.
In addition, reports indicate that Amazon’s new AI-powered Alexa, which was showcased in September, may not be ready for deployment. Former employees have suggested that the company lacks sufficient data and access to the necessary hardware to support the advanced language model driving the updated assistant. Furthermore, Amazon is allegedly prioritizing the development of generative AI for its cloud computing division, Amazon Web Services, over advancing Alexa.
In response, Amazon has countered claims regarding its AI efforts, insisting that its Artificial General Intelligence team has access to both in-house chips and Nvidia GPUs. The company maintains its commitment to creating the world’s leading personal assistant.