Amazon’s initiative to generate profit through its Alexa-enabled devices has not yielded positive results, with reports indicating significant financial losses. According to the Wall Street Journal, the online retail giant suffered over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, as revealed by internal documents and sources close to the situation.
Despite boasting hundreds of millions of customers for its devices, the Echo speakers, equipped with Alexa, are mainly utilized for free services such as setting alarms rather than facilitating purchases on Amazon.
A former senior employee expressed concern, noting the irony of hiring 10,000 individuals to create functionality that primarily serves as a simple timer.
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for Alexa. However, internal sources suggest that some engineers are skeptical about the potential effectiveness of this new offering.
An Amazon spokesperson stated that the company prioritizes the value created through customer interactions with its services rather than focusing solely on device sales. They emphasized that the Devices & Services unit has developed several profitable ventures and is positioned for future success.
Nevertheless, the newly presented AI-powered version of Alexa, showcased in September, is said to be far from completion. Former employees claim that the company lacks sufficient data and access to the necessary technology to operate the large language model (LLM) that will underpin this iteration of the virtual assistant. Reports also indicate that Amazon has shifted its focus away from AI-enhanced Alexa to concentrate on generative AI within its cloud computing sector, Amazon Web Services.
In response, Amazon contended that its former employees’ remarks about the Alexa AI developments are inaccurate. The company asserted that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to developing top-tier personal assistant technology.