Amazon’s ambition to generate revenue from Alexa-enabled devices has reportedly fallen short, resulting in the company losing billions. According to a report from the Wall Street Journal, Amazon incurred losses exceeding $25 billion between 2017 and 2021 from its Echo, Kindle, and other related devices, as indicated by internal documents and sources familiar with the situation. Although Amazon boasts hundreds of millions of customers for its devices, data suggests that the Echo speakers are primarily utilized for basic functions like setting alarms rather than for shopping purposes.
A former senior employee expressed concern about the company’s strategy, mentioning an emphasis on hiring thousands of staff while producing a product that functions primarily as a smart timer.
In response to these challenges, CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of Alexa. However, engineers involved in the project have expressed skepticism about whether this approach will significantly change the current trend.
An Amazon spokesperson emphasized the company’s commitment to the value delivered through their services, noting that the Devices & Services division has successfully established profitable businesses and is set to maintain that trajectory.
Additionally, reports suggest that a new AI-powered version of Alexa, showcased in September, is facing development hurdles. Former employees claim that the necessary data and hardware, including large language model capabilities, are lacking. Amazon is also said to have shifted its focus towards developing generative AI for its cloud services, Amazon Web Services, instead of prioritizing the new Alexa.
In contrast, Amazon has countered these claims, asserting that former employees are misinformed and that its Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs. The company maintains its goal of creating the premier personal assistant with Alexa.