Amazon’s strategy to generate profit from its Alexa-enabled devices has reportedly resulted in substantial financial losses, totaling over $25 billion from 2017 to 2021. According to the Wall Street Journal, internal documents and sources familiar with the situation indicate that despite having hundreds of millions of customers using devices like the Echo and Kindle, the Alexa-enabled speakers are primarily used for basic functions, such as setting alarms, rather than facilitating purchases on Amazon.
A former senior employee expressed concern about the extensive hiring, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, CEO Andy Jassy is seeking solutions, including the introduction of a paid version of Alexa. However, some engineers involved in the development of this paid tier reportedly doubt its potential to make a significant impact.
An Amazon spokesperson emphasized the company’s focus on the overall value created for customers through its services, rather than solely on device sales. They claimed that the Devices & Services division has successfully established various profitable ventures and remains well-equipped for future growth.
Additionally, Amazon’s new AI-driven version of Alexa, which was showcased in September, is reportedly still in development and faces challenges, according to former employees. The company lacks sufficient data and access to the necessary hardware, such as the chips required to execute the large language model powering the new assistant. Instead, the firm has prioritized developing generative AI for its cloud service, Amazon Web Services.
Amazon has countered these claims, asserting that its former employees are misinformed and that the Amazon Artificial General Intelligence team has access to crucial in-house Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to building the “world’s best personal assistant.”