Amazon’s strategy to profit from its Alexa-enabled devices is proving detrimental, reportedly costing the company billions. Internal documents revealed that from 2017 to 2021, Amazon lost over $25 billion on its Echo, Kindle, and other devices, according to the Wall Street Journal. Although Amazon boasts hundreds of millions of device users, the Echo speakers are more frequently utilized for free functions like setting alarms rather than for shopping on Amazon.
A former senior Amazon employee expressed concerns about the effectiveness of their workforce and resources, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the financial challenges, Amazon CEO Andy Jassy is pursuing solutions, including the introduction of a paid tier for its voice assistant. However, some engineers working on this version are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value generated from services beyond device sales. They stated that the Devices & Services organization has created several profitable businesses and is poised for continued success.
In addition, Amazon’s newly developed AI-powered Alexa, showcased in September, is reportedly far from completion, as former employees noted a lack of data and necessary chips for its operation. The company has shifted priorities to enhance generative AI within its cloud computing sector, Amazon Web Services.
Amazon refuted claims made by former employees about its current AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company maintains that its objective for Alexa is to develop the best personal assistant globally.