Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly resulted in significant financial losses for the company, amounting to over $25 billion between 2017 and 2021. This information comes from internal documents and sources familiar with the matter, as reported by the Wall Street Journal. Although Amazon claims to have hundreds of millions of users for its devices, the data suggests that the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms rather than for making purchases on Amazon.
A former senior Amazon employee expressed concerns about the company’s resource allocation, 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 reportedly exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers working on this new version of the voice assistant are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to value creation through its services, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In addition, Amazon recently showcased a new artificial intelligence-powered version of Alexa, but former employees have indicated that it is far from ready. Reports suggest that the company is lacking sufficient data and the necessary chips to support the advanced language model for this new version. Moreover, Amazon appears to be prioritizing generative AI development for its cloud computing arm, Amazon Web Services, over the AI-powered Alexa.
In response to these claims, Amazon stated that its former employees are misinformed about the current state of its Alexa AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its goal to build “the world’s best personal assistant.”