Amazon’s attempts to generate revenue from its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the matter, the online retail giant suffered over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021.
Despite boasting hundreds of millions of customers for its devices, reports indicate that Alexa-enabled Echo speakers are predominantly used for basic functions such as setting alarms and utilizing free applications, rather than facilitating shopping on Amazon.
A former Amazon executive expressed concern, 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 seeking solutions and is said to be launching a paid tier for its voice assistant. However, some engineers working on this version of Alexa have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized that the company focuses on the value created through customer engagement with services, rather than solely on device sales. They highlighted that the Devices & Services division has established various profitable business lines and is positioned for future success.
Meanwhile, reports suggest that Amazon’s newly introduced AI-powered Alexa, which was demonstrated in September, is not yet ready. Former employees noted that the company is lacking sufficient data and access to essential hardware needed to support the large language model (LLM) that powers the updated assistant. Additionally, it appears Amazon has shifted its priorities toward developing generative AI for its cloud computing arm, Amazon Web Services.
Amazon has countered claims from former employees, asserting that they are misinformed regarding current efforts to develop Alexa’s AI capabilities. The company stated that its Artificial General Intelligence team has access to necessary resources, including in-house Trainium chips and Nvidia GPUs, affirming its commitment to creating “the world’s best personal assistant.”