My wager is that the devices are sold as a loss leader.

Then on top the software development is fairly novel - so they're probably spending quite a bit on development efforts related to the devices.

They're eating the costs for running the backend processing for all of these devices (they're sold as a one time fee, despite requiring services provided by Amazon servers).

Finally - they were promoting the ever loving shit out of the development tooling to app developers for a long time with a lot of seminars, development guides, free services on aws, etc.

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My strong guess is they wanted them work out the same way Kindles have - loss leaders that more than make up for it by securing digital goods purchases. But personally - I spend lots of money on amazon for books for my Kindle, and I spend basically nothing related to Alexa (there's literally just nothing I want to buy through it).

Lately my Alexa has started inserting promotional content into the standard voice responses (bs like "Alexa what time is it" returns the time, and then a "and it's a good time to watch the new Rings of Power tv show? should I tell you about it?").

They're going to go into the trash shortly at this rate. I'll switch to a self hosted replacement like mycroft or something.