Amazon’s strategy to profit from its Alexa-enabled devices has reportedly failed, resulting in substantial financial losses for the company.
The online retail giant has incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, according to internal documents and unnamed sources cited by the Wall Street Journal. While Amazon has millions of customers for its devices, the Alexa-enabled Echo speakers are predominantly used for setting alarms and using free applications rather than shopping on Amazon.
A former senior Amazon employee told the Wall Street Journal, “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 exploring solutions, and the company is reportedly planning to introduce a paid tier for its voice assistant. However, some engineers working on the paid version are skeptical about its potential success, according to the Wall Street Journal.
An Amazon spokesperson stated, “We are focused on the value we create when customers use our services, not just when they buy our devices. Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In the meantime, Amazon’s new artificial intelligence-powered Alexa, showcased in September, is reportedly far from ready, as claimed by former employees. The company faces a shortage of data and the necessary chips to run the large language model (LLM) that powers the new version of its virtual assistant, Fortune reported. Additionally, Amazon has reportedly shifted its focus from the AI-powered Alexa to developing generative AI for its cloud computing division, Amazon Web Services.
Amazon has countered these claims, stating that its former employees are misinformed. The company asserts that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). Amazon’s objective for Alexa remains unchanged: to build the world’s best personal assistant.