Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021. This information comes from internal documents and sources familiar with the situation, as reported by the Wall Street Journal. Although Amazon attracts hundreds of millions of customers with its Echo and Kindle devices, usage of the Alexa-enabled Echo speakers appears to be primarily for basic tasks such as setting alarms rather than for making purchases on Amazon.
A former senior Amazon employee expressed concerns about the company’s investments, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the financial challenges, CEO Andy Jassy is seeking solutions, which include the introduction of a paid version of the voice assistant. However, some Amazon engineers are reportedly skeptical about the potential effectiveness of this paid tier.
An Amazon spokesperson emphasized the company’s focus on creating value for customers through its services, not just its devices. They noted that the Devices & Services organization has successfully established profitable ventures and is positioned to continue doing so.
In addition, Amazon introduced a new AI-powered version of Alexa in September, though former employees suggest it is far from ready for launch. Challenges such as insufficient data and limited access to the necessary chips for operating the new large language model have hindered progress. The company has also shifted its focus toward developing generative AI for Amazon Web Services, deprioritizing the advancement of the AI-powered Alexa.
Amazon countered claims made by former employees, asserting that they are misinformed regarding current AI initiatives. The company stated that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs, reaffirming its commitment to building “the world’s best personal assistant.”