Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly not been successful, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, internal documents reveal that Amazon lost over $25 billion between 2017 and 2021 due to its Echo, Kindle, and other devices.
Despite having hundreds of millions of users, Alexa-enabled Echo speakers are primarily utilized for basic functions such as setting alarms and using free apps, rather than facilitating purchases on Amazon. A former senior employee expressed concerns about the effectiveness of these devices, saying, “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 reportedly seeking solutions and is considering the launch of a paid version of its voice assistant. However, some engineers working on this initiative are skeptical about its potential impact.
An Amazon spokesperson stated, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” adding that the Devices & Services organization has already established several profitable businesses and remains optimistic about the future.
In addition, the new AI-powered version of Alexa, demonstrated in September, is reportedly facing delays. Former employees have indicated that the company lacks sufficient data and the necessary chips to support the advanced language model that would power the new assistant. Furthermore, Amazon is said to be prioritizing generative AI development for its cloud computing service, Amazon Web Services, over the AI capabilities for Alexa.
In defense, Amazon contends that feedback from former employees is incorrect and insists that its efforts to enhance Alexa’s AI capabilities are on track. The company claims that its Artificial General Intelligence team has access to the required Trainium chips and Nvidia GPUs, and that its objective remains the same: to create the world’s best personal assistant.