As Alexa celebrates its 10th anniversary, Amazon is increasingly shifting its focus towards generative AI, despite the smart speaker division facing significant financial losses. The Echo smart speakers, which house Alexa, have long been sold at a loss, a strategy Amazon could sustain due to its sheer size. However, this loss leader approach, akin to selling printers below cost and profiting from ink sales, has begun to strain the company’s finances.

From a market penetration standpoint, Amazon’s strategy has been effective. Earlier this year, Jeff Bezos revealed that Alexa is now present in 100 million homes, spread across 400 million devices worldwide. However, the financial reality is starkly different. A report from The Wall Street Journal highlights that Amazon's devices division incurred losses of $25 billion between 2017 and 2021. In 2022 alone, the Alexa division reportedly lost $10 billion.

As losses mount, the situation became unsustainable by the end of 2023, leading to significant layoffs within the Alexa unit. Even a company with over $600 billion in annual revenue cannot indefinitely sustain such substantial losses, particularly amid challenging economic conditions.

Alexa is not alone in its struggles. Other smart assistants, such as Bixby and Cortana, have either faded into obscurity or disappeared altogether. Meanwhile, interest in Google Assistant and Siri has also dwindled. However, recent moves by tech giants suggest they are not ready to abandon their AI-powered assistants just yet. At WWDC in June, Apple revitalized Siri under its new Apple Intelligence initiative, while Google recently announced that its Assistant would receive enhancements powered by Gemini AI technology.