Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly not been successful; in fact, the company has incurred losses amounting to billions of dollars. According to an article from the Wall Street Journal, internal documents suggest that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, it seems that users primarily utilize the Alexa-enabled Echo speakers for setting alarms and accessing free applications, rather than making purchases on Amazon.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, there are doubts among some of the engineers involved in this initiative about its potential effectiveness.
An Amazon spokesperson emphasized that the company focuses on the value created when customers use its services, rather than solely on device sales. They noted that the Devices & Services division has successfully established various profitable ventures for Amazon and is expected to continue doing so in the future.
In addition, the new AI-enhanced version of Alexa, which was demonstrated in September, is said to be far from ready. Former employees have mentioned that the company lacks sufficient data and access to the necessary chips to support the large language model driving this new assistant. Furthermore, it has been reported that Amazon is prioritizing generative AI development for its cloud computing sector, Amazon Web Services, over the AI-powered Alexa initiatives.
In response to these claims, Amazon refuted the assertions of its former employees, stating they are misinformed about the current state of its AI endeavors. The company affirmed that the Amazon Artificial General Intelligence team has access to its proprietary Trainium chips and Nvidia GPUs, reinforcing its commitment to creating what it aims to be the best personal assistant globally.