Amazon’s strategy to profit from its Alexa-enabled devices has not been successful, leading to significant financial losses for the company. According to reports, Amazon lost more than $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. Internal documents and sources familiar with the matter cited that while Amazon has amassed hundreds of millions of customers for its devices, the usage of Alexa-enabled Echo speakers tends to lean more towards basic functions like setting alarms rather than facilitating purchases on Amazon.
A former senior employee expressed concerns, highlighting a disconnect between hiring large teams and the actual utility of the product, noting, “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 Alexa. However, some engineers have voiced skepticism about whether this initiative will yield significant improvements.
An Amazon spokesperson addressed these issues, emphasizing the company’s focus on the value created through customer engagement rather than solely device sales. They stated that the Devices & Services division has successfully launched profitable ventures and is positioned for future success.
Additionally, Amazon’s upcoming AI-powered version of Alexa, showcased in September, is reportedly not nearing readiness, according to former employees. The company is said to lack sufficient data and access to the necessary chips for the large language model that would drive this next iteration of its virtual assistant. It has been suggested that Amazon is prioritizing the development of generative AI for its cloud services over advancing Alexa.
Amazon has pushed back against claims made by former employees, asserting that their insights are misguided. The company maintains that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs and reaffirmed its commitment to creating the leading personal assistant in the market.