Amazon’s strategy to profit from its Alexa-enabled devices has been less successful than anticipated, leading to losses exceeding $25 billion from 2017 to 2021, according to a report by the Wall Street Journal referencing internal documents and sources familiar with the situation. Despite boasting hundreds of millions of customers for its devices, the usage of Alexa-enabled Echo speakers is reportedly more centered around basic functions like setting alarms, rather than driving purchases on Amazon.
A former senior Amazon employee expressed concerns about the company’s workforce expansion, highlighting that the results have not lived up to expectations. As a response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for Alexa. however, some engineers working on this paid version are skeptical about its potential impact.
An Amazon spokesperson stated that the company prioritizes the value created through its services, not solely device sales. They emphasized that Amazon’s Devices & Services organization has developed various profitable business models and is positioned for future successes.
In addition, the debut of Amazon’s new AI-powered Alexa, showcased in September, is said to be far from completion. Former employees have indicated that the company lacks sufficient data and access to essential chips necessary for its advanced language model. Reports suggest that Amazon has shifted its focus from enhancing Alexa to advancing generative AI within its cloud computing division, Amazon Web Services.
In response to these claims, Amazon asserted that the criticisms stem from misinformed former employees and reassured that its Artificial General Intelligence team has adequate access to both Trainium chips and Nvidia’s GPUs. The company maintains that its objective for Alexa remains unchanged: to develop the world’s leading personal assistant.