Amazon’s $25 Billion Alexa Bet: A Smart Timer or a Missed Opportunity?

Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, resulting in substantial losses totaling over $25 billion from 2017 to 2021. The Wall Street Journal, referencing internal documents and unnamed sources, highlighted that despite attracting hundreds of millions of customers for its devices, the primary functions of the Alexa-enabled Echo speakers tend to revolve around setting alarms and utilizing free applications, rather than shopping 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 these challenges, Amazon CEO Andy Jassy is in search of solutions and is expected to introduce a paid version of the voice assistant. However, some engineers involved in the development of this paid version have voiced skepticism regarding its potential impact.

An Amazon spokesperson remarked that the company prioritizes the value generated from customer engagement with its services rather than solely on device sales. They noted that the Devices & Services division has successfully established several profitable ventures and remains positioned for future successes.

Meanwhile, Amazon’s newly AI-driven Alexa, unveiled in September, is reportedly far from ready, according to former employees. They claim that the company lacks sufficient data and access to the necessary chips for running the large language model that underpins the updated virtual assistant. Additionally, it appears that Amazon has shifted its focus from AI developments for Alexa to enhancing generative AI capabilities within its cloud computing division, Amazon Web Services.

In response to these concerns, Amazon contended that the feedback from former employees is inaccurate, asserting that its Artificial General Intelligence team has access to the required in-house Trainium chips as well as Nvidia graphics processing units (GPUs). The company reiterated its commitment to its overarching goal: to create the world’s best personal assistant.

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