Amazon’s strategy to generate revenue through its Alexa-enabled devices appears to be faltering, leading to significant financial losses for the company. Between 2017 and 2021, Amazon reportedly lost over $25 billion from its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation. While Amazon claims to have hundreds of millions of customers for its devices, it seems that its Alexa-enabled Echo speakers are primarily used for simple tasks like setting alarms, rather than for shopping on its platform.
Concerns have been raised by former employees, with one noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of Alexa. However, some engineers working on this initiative have expressed doubts about its potential impact.
An Amazon spokesperson stated that the company is prioritizing the value created when customers use its services, rather than focusing solely on device sales. The spokesperson also highlighted that Amazon’s Devices & Services organization has successfully established several profitable ventures and is poised to continue this trend.
In a separate development, the new AI-based version of Alexa, which was showcased in September, is reportedly still in its early stages. Former employees noted that the company lacks sufficient data and access to the necessary chips to support the advanced language model that underpins the upgraded assistant. Furthermore, Amazon seems to be shifting its focus towards generative AI for its cloud computing arm, Amazon Web Services.
Amazon has countered claims made by former employees, asserting they are misinformed about the progress of its Alexa AI initiatives. The company emphasized that its Artificial General Intelligence team has access to its own Trainium chips as well as Nvidia GPUs, and reiterated that its goal is to create the best personal assistant in the world.