Amazon’s efforts to generate revenue through its Alexa-enabled devices have reportedly resulted in significant financial losses, totaling over $25 billion from 2017 to 2021. According to a report by the Wall Street Journal, which cites internal documents and sources familiar with the situation, the online retail giant’s Echo, Kindle, and other devices have not performed well in terms of profitability.
Despite having hundreds of millions of customers using these devices, it appears that many users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms and accessing free apps, rather than making purchases on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
Currently, Amazon’s CEO Andy Jassy is exploring potential solutions and is rumored to be launching a paid version of its voice assistant. However, there are doubts among engineers working on this project, as some are skeptical that it will lead to a substantial change in revenue.
In a statement, an Amazon spokesperson emphasized that the company prioritizes the value created from customer interactions with its services, rather than solely focusing on device sales. They highlighted that the Devices & Services organization has established several profitable ventures for Amazon and remains well-positioned for future success.
Additionally, while Amazon recently showcased its new AI-powered Alexa, former employees suggest that the project is still far from completion. Reports indicate that the company lacks sufficient data and access to the necessary chips for operating the advanced language model that would enhance its virtual assistant capabilities. Instead, Amazon has reportedly redirected its focus towards generative AI for its cloud computing sector, Amazon Web Services.
Amazon contends that the claims made by former employees regarding its Alexa AI initiatives are inaccurate, asserting that the Amazon Artificial General Intelligence team has access to the required Trainium chips and Nvidia GPUs. The company remains committed to its vision of developing “the world’s best personal assistant.”