Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, leading to losses in the billions. According to internal documents and sources familiar with the situation, the company lost over $25 billion on devices like Echo and Kindle from 2017 to 2021, as stated by the Wall Street Journal. While Amazon has a vast customer base for these devices, it appears that users predominantly utilize them for basic functions such as setting alarms, rather than for shopping on Amazon.
A former senior Amazon employee expressed concerns, noting, “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 Alexa. However, some engineers at Amazon are skeptical about whether this change will significantly impact the company’s fortunes.
An Amazon spokesperson commented, “We are focused on the value we create when customers use our services, not just when they buy our devices.” They highlighted that the Devices & Services organization has established profitable ventures for the company and is positioned to continue doing so.
In addition, Amazon’s latest AI-powered version of Alexa, unveiled in September, is reportedly not ready for deployment. Former employees indicated that the company lacks sufficient data and access to necessary chips to support the advanced language model for the new assistant. Furthermore, it seems Amazon has shifted its priorities to concentrate on generative AI for its cloud computing division, Amazon Web Services.
Amazon has countered these claims, asserting that the information from former employees is inaccurate. They stated that the Amazon Artificial General Intelligence team has access to adequate resources, including in-house Trainium chips and Nvidia GPUs, and affirmed that their goal for Alexa remains to create the world’s leading personal assistant.