Amazon’s strategy to profit from its Alexa-enabled devices appears to be failing, resulting in significant financial losses for the company. Internal documents and sources cited by the Wall Street Journal reveal that Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, usage of Alexa-enabled Echo speakers is reportedly limited to functions like setting alarms and accessing free apps, rather than driving sales on Amazon’s platform.
A former senior Amazon employee expressed concerns about the company’s direction, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the financial setbacks, CEO Andy Jassy is seeking solutions and plans to introduce a paid version of the voice assistant. However, some engineers doubt that this new strategy will yield the desired results.
According to an Amazon spokesperson, the company is concentrating on the value generated through customer interactions, not solely on device sales. They emphasized that the Devices & Services organization has already created numerous profitable businesses and is positioned to continue this trajectory.
In addition, the newly unveiled AI-powered Alexa, demonstrated in September, is reportedly still in development. Former employees have indicated that the project is far from completion due to insufficient data and limited access to essential technology. Amazon has also shifted its focus toward developing generative AI capabilities for its cloud division, Amazon Web Services.
In response to the criticism, Amazon asserted that the claims made by former employees are incorrect and that its Artificial General Intelligence team is equipped with the necessary resources, including proprietary Trainium chips and Nvidia GPUs, to advance its plans for Alexa as the leading personal assistant.