Amazon’s strategy to profit from its Alexa-enabled devices appears to be faltering, leading to significant financial losses for the company. According to a report from the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources within the company. Although Amazon has attracted hundreds of millions of customers for its devices, the usage of its Alexa-enabled Echo speakers is primarily for setting alarms and using free applications, rather than for making purchases on Amazon.
A former senior Amazon employee expressed concerns about the company’s hiring practices, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the ongoing issues, CEO Andy Jassy is seeking solutions and reportedly intends to introduce a paid version of Alexa. However, some engineers at Amazon are skeptical that this initiative will yield positive results.
An Amazon spokesperson stated, “We are focused on the value we create when customers use our services, not just when they buy our devices.” They highlighted that the Devices & Services organization has established several profitable ventures for Amazon and is poised for future success.
In addition, the anticipated AI-powered version of Alexa, which was demonstrated in September, is reportedly not ready for launch. Former employees claim that the company lacks sufficient data and the necessary chips to operate the large language model (LLM) required for the upgrade. Furthermore, it has been suggested that Amazon has shifted its focus from the AI-enhanced Alexa to developing generative AI for its cloud computing division, Amazon Web Services.
Amazon has disputed the claims made by former employees, asserting that they are misinformed about current efforts related to Alexa AI. The company emphasized that the Amazon Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia graphics processing units (GPUs). Their commitment to Alexa, they stated, remains unchanged: to develop the world’s leading personal assistant.