Amazon’s strategy to profit from its Alexa-enabled devices has reportedly not been successful, resulting in substantial losses for the company. According to the Wall Street Journal, citing internal documents and anonymous sources, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices from 2017 to 2021. Even though Amazon has millions of customers for its devices, the Alexa-enabled Echo speakers are primarily used for setting alarms and other free applications rather than for shopping on Amazon.
A former senior Amazon employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is seeking solutions, and the company is reportedly introducing a paid tier for its voice assistant. However, some Amazon engineers working on the paid version of Alexa are skeptical about its potential impact.
An Amazon spokesperson remarked, “We are focused on the value we create when customers use our services, not just when they buy our devices. Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In parallel, Amazon’s new AI-powered Alexa, showcased in September, is reportedly far from ready, according to former employees. The company lacks sufficient data and access to the necessary chips to operate the large language model (LLM) behind the new version of its virtual assistant. Fortune reported that Amazon has shifted focus from the AI-powered Alexa to developing generative AI for its cloud computing division, Amazon Web Services.
Amazon countered these claims, stating that its former employees are misinformed about the current Alexa AI initiatives. The company asserted that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Amazon’s plan for Alexa “remains the same — to build the world’s best personal assistant.”