Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in substantial 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 from 2017 to 2021. Despite boasting hundreds of millions of device users, it appears that customers primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms rather than for shopping on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers working on this initiative are skeptical about its potential effectiveness.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Additionally, reports suggest that Amazon’s new AI-powered version of Alexa, which was showcased in September, is not progressing as planned. Former employees claim that the company lacks sufficient data and access to the necessary chips for the advanced language model needed to enhance the virtual assistant. Moreover, it seems Amazon has shifted its focus toward developing generative AI for its cloud computing division, Amazon Web Services, rather than prioritizing improvements for Alexa.
In response to these claims, Amazon argued that the information from former employees is inaccurate, stating that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company remains committed to its goal of creating the best personal assistant in the world.