I work in IT, and agree with other comments about a software bug! In itself, shouldn't be to big a deal, providing that is, the company are willing to work on software update. I guess you could ask yourself, "work on a fix and make no money?" Or, "sell another product?"
In my humble opinion, it makes perfect business sense not to try and fix a fault after some 1 to 2 years of use. I had same issue with Fitbit Blayze, just crept over the 2 year warranty window and it refused to turn on. I thought I could replace the battery - wrong! For some unknown reason the battery had been soldered to the unit making it practically impossible to replace. I wonder why they do that, I thought to myself, then I realised ;)
If it does help anyone, I can connect to a blue tooth speaker and use it that way. I just happened to have a spare speaker not being used. I wouldn't go and buy one, for that, you may as well buy another Echo. Funnily enough though, it does not work when connected to a speaker using an audio cable :)
I have the same problem with a black first gen echo; it hears voice commands, but doesn't respond. It happens intermittently. Sometimes a day or a week will go by without the problem, but never more than a few weeks. This problem was evident within the first few months after purchasing. Reading all that others have said, it's definitely an inherent problem. I'd venture to guess that Amazon knows what it is, or else the problem would continue to plague their latest echo devices.