Amazon’s strategy to generate profit through its Alexa-enabled devices has fallen short, resulting in significant financial losses for the company. Reports indicate that from 2017 to 2021, Amazon incurred losses exceeding $25 billion on products such as the Echo and Kindle, according to internal documents and sources familiar with the situation, as noted by the Wall Street Journal. Despite having hundreds of millions of customers utilizing its devices, the primary functions of Alexa-enabled Echo speakers revolve around setting alarms and using free applications rather than facilitating 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.” In response to these challenges, Amazon CEO Andy Jassy is exploring potential solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in developing this paid version are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value derived from services used by customers, rather than solely on device sales. They highlighted that the Devices & Services division has established several profitable ventures for Amazon and is poised for future success.
In addition, Amazon’s newly introduced AI-powered Alexa, which was showcased in September, is reportedly not yet fully prepared for deployment, according to former employees. They claim the company lacks sufficient data and access to necessary chips to operate the advanced language model behind the upgraded virtual assistant. Furthermore, Amazon has allegedly shifted its priorities towards developing generative AI for its cloud computing sector, Amazon Web Services.
In response to these claims, Amazon disputed the accuracy of the former employees’ statements, asserting that its Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to building “the world’s best personal assistant” through Alexa.