Amazon’s efforts to drive revenue through its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. Between 2017 and 2021, Amazon lost over $25 billion on products like Echo and Kindle, according to a report from the Wall Street Journal based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers using these devices, many users primarily use the Alexa-enabled Echo speakers for simple functions like setting alarms, rather than for shopping on Amazon.
A former senior employee expressed concerns about the company’s investment in personnel and resources, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for the Alexa voice assistant. However, some engineers are skeptical that this initiative will lead to significant changes.
An Amazon spokesperson stated, “We’re focused on the value we create when customers use our services, not just when they buy our devices.” The spokesperson highlighted the profitability of various businesses within Amazon’s Devices & Services organization.
Additionally, Amazon’s newly introduced AI-enhanced Alexa, which was showcased in September, has faced criticism from former employees who claim it is not ready for deployment. They argue that the company is lacking sufficient data and access to the necessary technology to support the large language model (LLM) needed for the new version of Alexa. Reports indicate that Amazon has also shifted its focus away from the AI-powered Alexa to prioritize the development of generative AI for its cloud computing services, Amazon Web Services.
In rebuttal, Amazon contends that its former employees are misinformed regarding the status of its Alexa AI initiatives. The company claims that its Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia GPUs, maintaining that its goal remains to create the world’s leading personal assistant.