Amazon’s initiative to generate revenue via its Alexa-enabled devices has reportedly led to significant financial losses, amounting to billions of dollars for the tech giant.
According to internal documents and unnamed sources cited by the Wall Street Journal, Amazon lost over $25 billion on its Echo, Kindle, and other devices from 2017 to 2021. While the company boasts hundreds of millions of customers for its devices, it appears that the Alexa-enabled Echo speakers are predominantly used for setting alarms and utilizing free apps, rather than for making purchases on Amazon.
A former senior Amazon employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the challenges, Amazon’s CEO Andy Jassy is reportedly exploring strategies to improve the situation, including the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid tier are skeptical about its potential impact.
An Amazon spokesperson defended the company’s approach, stating, “We are focused on the value we create when customers use our services, not just when they buy our devices.” They noted that the Devices & Services organization has successfully established several profitable ventures for Amazon and is positioned to continue doing so.
Simultaneously, Amazon’s new AI-powered version of Alexa, previewed in September, is reportedly far from complete. Former employees have indicated that the company lacks sufficient data and access to the necessary chips for running the large language model driving the updated assistant. Furthermore, Amazon has allegedly shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services, rather than prioritizing the AI-powered Alexa.
In response to these claims, Amazon dismissed the assertions of its former employees, emphasizing that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). The company reiterated its commitment to building “the world’s best personal assistant.”