Amazon’s strategy to generate revenue from its Alexa-enabled devices appears to be faltering, leading to significant financial losses for the company. According to a report by the Wall Street Journal, Amazon has incurred losses exceeding $25 billion from its Echo, Kindle, and other gadgets between 2017 and 2021, based on internal documents and sources acquainted with the situation. While Amazon boasts hundreds of millions of customers using its devices, it seems that the Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms, rather than for shopping.
A former senior employee at Amazon expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of Alexa. However, there are concerns among some engineers about whether this change will have a meaningful impact.
An Amazon representative commented, “We focus on the value we create when customers use our services, not just when they buy our devices,” adding that the company’s Devices & Services unit has developed numerous profitable businesses and is poised for future success.
Additionally, the new AI-powered version of Alexa, which Amazon showcased in September, is said to be far from ready, as reported by former employees. They suggest that the company lacks sufficient data and access to the necessary chips to support the large language model driving the latest iteration of its virtual assistant. Reports indicate that Amazon has shifted its focus towards developing generative AI for its cloud computing service, Amazon Web Services, instead of prioritizing updates for Alexa.
In response to these claims, Amazon has stated that its former employees are misinformed regarding the company’s current AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs. The company’s commitment to enhancing Alexa remains steadfast, with the goal of creating the world’s leading personal assistant.