Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded the expected results and has reportedly resulted in substantial financial losses for the company. According to the Wall Street Journal, internal documents and sources familiar with the situation indicate that Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon has attracted hundreds of millions of users with its devices, the primary functions of its Alexa-enabled Echo speakers are to set alarms and utilize free applications, rather than facilitate shopping on Amazon.
A former senior employee expressed concern, 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 seeking solutions, including the launch of a paid tier for its voice assistant. However, some engineers involved in this initiative fear it may not lead to significant improvements.
An Amazon spokesperson emphasized the company’s commitment to creating value through its services, beyond merely selling devices. They noted that the Devices & Services division has developed several profitable business lines and is well-positioned for future growth.
In addition, Amazon recently showcased a new AI-powered version of Alexa but former employees claim it is far from ready. They assert that the company lacks sufficient data and access to the necessary chips for the large language model underlying the upgraded assistant. Furthermore, Amazon is said to have shifted its focus toward developing generative AI for its cloud computing arm, Amazon Web Services, potentially sidelining the AI-enhanced Alexa project.
In response to these criticisms, Amazon contended that former employees are misinformed regarding its current efforts with Alexa’s AI capabilities. The company stated that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Amazon reiterated its commitment to building “the world’s best personal assistant.”