Amazon’s initiative to generate revenue from its Alexa-enabled devices is reportedly falling short, resulting in significant financial losses totaling over $25 billion between 2017 and 2021, according to the Wall Street Journal, which cited internal documents and anonymous sources familiar with the situation. Despite having hundreds of millions of customers for its devices, the usage of Alexa-enabled Echo speakers appears to skew more towards setting alarms and utilizing free applications rather than facilitating shopping on Amazon.
A former senior Amazon employee expressed concerns, noting, “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 the voice assistant. Nonetheless, some engineers at Amazon remain skeptical about the potential impact of this paid version of Alexa.
An Amazon spokesperson commented, “We’re focused 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 several profitable ventures and is well-positioned for future growth.
On another note, reports indicate that Amazon’s new AI-powered Alexa, demonstrated in September, may not be fully prepared for launch. According to former employees, the company lacks adequate data and access to the necessary chips to support the large language model (LLM) that drives the updated version of the virtual assistant. Furthermore, there are claims that Amazon has shifted its focus to developing generative AI for its cloud computing segment, Amazon Web Services, thereby deprioritizing the AI-driven version of Alexa.
Amazon rebutted these allegations, asserting that its former employees are misinformed about current AI developments, indicating that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company has reiterated its commitment to its vision for Alexa as “the world’s best personal assistant.”