Alexa’s Billion-Dollar Gamble: Is Amazon’s AI Dream Turning Sour?

Amazon’s venture into monetizing its Alexa-enabled devices has proven to be a costly endeavor, reportedly resulting in losses exceeding $25 billion between 2017 and 2021. This information comes from the Wall Street Journal, which cites internal documents and anonymous sources familiar with the situation. Despite attracting hundreds of millions of customers, the Echo speakers are primarily utilized for basic functions like setting alarms, rather than generating significant sales on Amazon’s platform.

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 the financial challenges, Amazon CEO Andy Jassy is reportedly exploring solutions, including the rollout of a paid tier for the voice assistant. However, some engineers involved in the project are skeptical about its potential impact on sales.

An Amazon spokesperson emphasized that the company focuses on the value generated through customer engagement with its services, rather than solely on device sales. The spokesperson added that the Devices & Services division has developed various profitable ventures and has a strong position for future growth.

Additionally, Amazon’s new AI-driven version of Alexa, showcased in September, is reportedly not ready for launch, according to former employees. Shortages in necessary data and chips needed for the large language model are cited as significant hurdles. Some insiders claim that the company has shifted priorities away from the AI-enhanced Alexa in favor of generative AI initiatives within its cloud computing sector, Amazon Web Services.

Amazon refuted claims made by former employees, asserting that they lack accurate information regarding the current state of Alexa’s AI development. The company affirmed that its Artificial General Intelligence team has access to required in-house Trainium chips and Nvidia GPUs, maintaining that their objective to create the world’s leading personal assistant remains unchanged.

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