Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to the Wall Street Journal, internal documents indicate that Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, the usage of Alexa-enabled Echo speakers appears to be predominantly for setting alarms and using free applications rather than for making purchases on Amazon.
A former senior employee expressed concerns about the effectiveness of the company’s investments, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to this situation, Amazon CEO Andy Jassy is reportedly seeking solutions and is launching a paid version of its voice assistant. However, some engineers working on the paid Alexa version have expressed skepticism about its potential impact.
An Amazon spokesperson defended the company’s approach, emphasizing, “We are focused on the value we create when customers use our services, not just when they buy our devices.” The spokesperson highlighted that the Devices & Services organization has developed several profitable ventures and is optimistic about future profitability.
Additionally, Amazon’s newly unveiled AI-enhanced Alexa is said to be far from ready, according to former employees. They noted that the company lacks sufficient data and access to the necessary chips to support the large language model driving the new assistant. Reports suggest that Amazon has shifted priorities towards developing generative AI for its cloud computing sector, Amazon Web Services.
In response to these claims, Amazon stated that the information from former employees is inaccurate. The company asserted that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs), maintaining that its goal remains to create the best personal assistant available.