Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to the Wall Street Journal, internal documents reveal that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, it seems that Alexa-enabled Echo speakers are primarily used for functions like setting alarms, rather than shopping on Amazon.
A former senior Amazon employee expressed concern, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” highlighting the perceived lack of customer engagement with shopping features.
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the launch of a paid tier for the voice assistant. However, some engineers working on this version of Alexa are skeptical about its potential effectiveness.
An Amazon spokesperson stated that the company is prioritizing the value created through customer interactions with its services, rather than solely focusing on device sales. They emphasized that the Devices & Services organization has generated profitable business ventures and is positioned to do so in the future.
Furthermore, concerns have emerged regarding Amazon’s new AI-powered Alexa, which was showcased in September. Former employees indicated that the new version is not yet ready, citing a lack of sufficient data and the necessary chips to operate the advanced language model supporting the update. Instead, Amazon has reportedly shifted its focus towards developing generative AI capabilities for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon contended that the former employees are misinformed about its current efforts in AI for Alexa, affirming that the Amazon Artificial General Intelligence team has access to needed resources, including in-house Trainium chips and Nvidia GPUs. The company’s objective to create “the world’s best personal assistant” remains unchanged.