Amazon’s strategy to generate revenue from its Alexa-enabled devices seems to be falling short, resulting in significant financial losses for the company. According to reports, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from unnamed sources.
Despite having hundreds of millions of users for its devices, it appears that Amazon’s Alexa-enabled Echo speakers are primarily being used for basic functions like setting alarms, rather than for shopping purposes. A former senior Amazon employee remarked, “We worried we’ve hired 10,000 people, and we’ve built a smart timer.”
In response to the situation, Amazon CEO Andy Jassy is seeking solutions, and the company is said to be launching a paid version of its voice assistant. However, some engineers working on this initiative express skepticism about its potential effectiveness.
An Amazon spokesperson emphasized that the company is focused on the value created from customer interactions with its services, not merely from device sales. They noted that the Devices & Services division has successfully established profitable businesses.
Meanwhile, the anticipated AI-enhanced version of Alexa that was demonstrated in September may not be ready, according to former employees. Reports suggest that the company lacks sufficient data and the necessary chips to support the advanced language model driving the new assistant. Additionally, Amazon has reportedly shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services.
Amazon disputes claims made by former employees, stating that they are misinformed about the current initiatives for Alexa AI. The company asserts that its Artificial General Intelligence team has access to appropriate resources, including proprietary Trainium chips and Nvidia GPUs, and remains committed to developing the best personal assistant possible.