Amazon’s strategy to generate revenue from its Alexa-enabled devices is reportedly falling short, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021.
Despite having a vast customer base for its devices, the usage of Alexa-enabled Echo speakers is primarily for basic functions like setting alarms, rather than for shopping through Amazon. A former senior employee expressed concerns about the investment in hiring 10,000 individuals and focusing on what they described as a “smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, and the company is reportedly planning to introduce a paid version of its voice assistant. However, some engineers involved in the development of this feature are skeptical about its potential effectiveness.
An Amazon spokesperson stated that the company is concentrating on the value created through their services rather than solely on device sales, asserting that the Devices & Services division has generated profitable ventures and is poised for future success.
On another front, the new AI-powered version of Alexa, which was showcased in September, is reportedly behind schedule and not ready for deployment, according to former employees. They indicated that Amazon lacks sufficient data and the necessary chips to support the advanced language model driving this iteration of the virtual assistant. The company has also shifted its focus toward generative AI for its cloud computing arm, Amazon Web Services.
Amazon refuted the claims from former staff, asserting that they are misinformed regarding the company’s current AI initiatives for Alexa. The company emphasized that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, maintaining its objective of developing the best personal assistant available.