Amazon’s initiative to generate profit from its Alexa devices has not achieved the desired results, leading to significant financial losses for the company. Reports indicate that from 2017 to 2021, Amazon incurred over $25 billion in losses associated with its Echo, Kindle, and other products, according to internal documents and sources familiar with the situation. Despite having hundreds of millions of users, the Alexa-enabled Echo speakers are primarily utilized for setting alarms and using free applications rather than for shopping on Amazon.
Former Amazon employees expressed concern about the company’s hiring strategy, with one noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” which underscores the disconnect between investment and user engagement in purchasing.
In light of these challenges, Amazon CEO Andy Jassy is seeking solutions and is reportedly introducing a subscription-based service for Alexa. However, some engineers involved in the development of this paid version are skeptical about its potential impact.
An Amazon spokesperson stated that the company is concentrating on the value created through user engagement with their services, rather than merely through device sales. They emphasized that the Devices & Services division has established several profitable ventures for Amazon and is poised for future success.
On another front, the new AI-driven version of Alexa, which the company showcased in September, is said to be far from completion, with former employees highlighting a lack of necessary data and hardware to support the advanced large language model (LLM) meant to enhance the assistant’s capabilities. Additionally, Amazon has reportedly shifted its focus away from this AI iteration of Alexa to prioritize generative AI developments within Amazon Web Services.
Amazon has countered claims from ex-employees, asserting that they are misinformed about the current status of its Alexa AI projects and that the Amazon Artificial General Intelligence team has access to required resources, including in-house Trainium chips and Nvidia GPUs. The company remains committed to its goal of creating the best personal assistant available.