Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to an article by the Wall Street Journal, internal documents reveal that Amazon lost more than $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although the company has amassed hundreds of millions of customers for its devices, users tend to utilize the Alexa-enabled Echo speakers primarily for functions like setting alarms and accessing free apps, rather than shopping on Amazon.
A former senior employee mentioned to the Wall Street Journal, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these issues, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, there are concerns among some engineers regarding the potential effectiveness of this paid version.
An Amazon spokesperson stated, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” emphasizing that the Devices & Services division has established profitable businesses and is well-positioned for future success.
In addition, Amazon introduced a new AI-powered version of Alexa in September, but former employees suggest it is far from ready. The company reportedly lacks sufficient data and access to the necessary chips to support the large language model (LLM) that would drive the new assistant. Furthermore, Amazon has shifted its focus toward developing generative AI for its cloud computing branch, Amazon Web Services.
In response to these claims, Amazon asserted that the statements from former employees are inaccurate and clarified that its Artificial General Intelligence team has access to both in-house developed Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing “the world’s best personal assistant” with Alexa.