Amazon’s efforts to profit from its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to internal documents reviewed by the Wall Street Journal, Amazon lost over $25 billion on its Echo, Kindle, and other devices from 2017 to 2021. Despite having hundreds of millions of customers, the usage of Alexa-enabled Echo speakers is primarily for basic functions like setting alarms instead of generating sales through Amazon.
A former senior employee expressed concerns about the company’s direction, 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 and is reportedly introducing a paid version of Alexa. However, some engineers within the company are skeptical about the paid model’s potential to drive a significant change.
An Amazon spokesperson commented that the company prioritizes the value created through its services rather than merely device sales. They noted that the Devices & Services organization has established various profitable ventures and is positioned to continue this trend.
In a related development, Amazon’s new AI-powered version of Alexa, showcased in September, is said to be far from ready, according to former employees. The company faces challenges with insufficient data and access to the necessary chips for the new large language model that will enhance its virtual assistant. Additionally, Amazon has reportedly shifted its focus towards generative AI for its cloud computing services, Amazon Web Services, instead of advancing the AI-powered Alexa.
Amazon has countered claims from former employees, stating that they are misinformed about the company’s AI initiatives. According to Amazon, its Artificial General Intelligence team has access to its proprietary Trainium chips and Nvidia GPUs, with a commitment to building the “world’s best personal assistant.”