Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly resulted in substantial financial losses, totaling over $25 billion from 2017 to 2021, according to internal documents and sources familiar with the situation, as reported by the Wall Street Journal. Despite attracting hundreds of millions of customers, usage of devices such as the Echo is primarily focused on basic functions like setting alarms rather than driving sales through Amazon.
A former senior Amazon employee expressed concerns about the lack of significant utility, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In light of these losses, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for its voice assistant, Alexa. However, some engineers involved in the development of this paid version are skeptical about its potential impact.
An Amazon spokesperson commented, “We are focused on the value we create when customers use our services, not just when they buy our devices,” asserting that the Devices & Services division has successfully established several profitable ventures and is well-positioned for future growth.
On a related note, the development of an advanced AI-powered version of Alexa, which was showcased in September, is reportedly facing significant challenges. Former employees claim that Amazon lacks sufficient data and access to the necessary chips to support the advanced language model for the new assistant. The company is said to have shifted its focus from this project to enhance generative AI capabilities for its cloud services division, Amazon Web Services.
Amazon has disputed claims made by former employees, stating that they are misinformed about the current state of its Alexa AI initiatives. The company insists that its Artificial General Intelligence team has access to in-house chips and Nvidia GPUs, and it remains committed to creating “the world’s best personal assistant.”