Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen flat, resulting in significant financial losses for the company. According to the Wall Street Journal, internal documents and sources indicate that Amazon has incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers are often primarily employed for basic functions like setting alarms, rather than for shopping purposes on Amazon.
A former senior Amazon employee expressed concern over the situation, highlighting that the company’s investment in hiring thousands of staff has not translated into successful product use.
In response to these challenges, Amazon CEO Andy Jassy is reportedly exploring solutions, including the launch of a paid tier for its voice assistant. However, some of the engineers working on this paid version have voiced doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers through its services, rather than solely through device sales. They noted that the Devices & Services division has successfully established multiple profitable ventures.
In addition, reports indicate that Amazon’s new AI-powered version of Alexa, showcased in September, is not yet ready for rollout. Former employees have claimed that the company lacks sufficient data and access to the necessary chips for the large language model driving this upgrade. Furthermore, the project appears to have been deprioritized in favor of advancements in generative AI for Amazon Web Services.
Amazon has countered that the claims of its former employees are inaccurate and that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing “the world’s best personal assistant” with Alexa.