Amazon’s strategy to profit from its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021. This information comes from a report by the Wall Street Journal, which cites internal documents and sources acquainted with the situation. Despite having hundreds of millions of customers for its devices, Alexa-enabled Echo speakers are primarily used for simple tasks like setting alarms rather than for shopping on Amazon.
A former senior employee expressed concern about the resources allocated, 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 seeking solutions, including the introduction of a paid tier for Alexa. However, some engineers involved in the development of this paid version have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s commitment to creating value beyond just device sales, noting the profitability of its Devices & Services division and its potential for future growth.
In addition, Amazon’s newly announced AI-powered Alexa, which was showcased in September, is reportedly still under development and lacks sufficient data and the necessary chip access to support the large language model that will power it. There are also indications that the company has shifted its focus toward generative AI for its cloud computing division, Amazon Web Services.
Amazon disputes claims from former employees regarding its AI capabilities, asserting that its Artificial General Intelligence team has the resources needed, including in-house Trainium chips and Nvidia graphics processing units (GPUs). The company’s goal for Alexa remains to create the world’s best personal assistant.