Amazon’s attempt to generate profit through its Alexa-enabled devices has reportedly backfired, resulting in losses amounting to billions of dollars. According to the Wall Street Journal, the online retail giant sustained more than $25 billion in losses from its Echo, Kindle, and other devices from 2017 to 2021, as indicated by internal documents and sources familiar with the situation. Despite having hundreds of millions of customers, it appears that the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms, rather than shopping on Amazon.
A former senior employee expressed concerns, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the project have expressed doubts about its potential success.
An Amazon spokesperson stated, “We focus on the value we create when customers use our services, not just when they buy our devices.” They emphasized that the Devices & Services organization has successfully established many profitable ventures for the company and is confident in its future prospects.
Additionally, Amazon’s new AI-enhanced Alexa, which was showcased in September, is reportedly still in the early stages of development, lacking adequate data and access to crucial chips necessary for operating the large language model. The company has also shifted its attention towards developing generative AI for its cloud computing division, Amazon Web Services, leading to a deprioritization of the AI-powered Alexa project.
Despite these challenges, Amazon asserts that its former employees have misunderstood its current efforts in Alexa AI, claiming that the Amazon Artificial General Intelligence team has the necessary resources, including in-house Trainium chips and Nvidia GPUs. The company’s commitment to creating “the world’s best personal assistant” remains unchanged.