Amazon’s effort to profit from its Alexa-enabled devices has reportedly faltered, resulting in substantial financial losses for the company. According to internal documents and sources close to the situation, Amazon incurred losses exceeding $25 billion on its Echo, Kindle, and various other devices from 2017 to 2021, as reported by the Wall Street Journal. While the online retail giant boasts a customer base in the hundreds of millions for its devices, data suggests that users primarily utilize the Alexa-enabled Echo speakers for tasks like setting alarms and accessing free applications, rather than for shopping on Amazon.
“There was concern that we hired 10,000 people to develop a high-tech timer,” a former senior Amazon employee commented to the Wall Street Journal.
In response to these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers at Amazon are skeptical about the potential effectiveness of this paid tier.
An Amazon spokesperson stated, “We focus on the value we create when customers use our services, not just when they buy our devices. Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so.”
In addition, the company’s recently demonstrated AI-enhanced Alexa is reportedly far from completion, according to previous employees. There are concerns regarding a lack of sufficient data and access to the necessary chips for running the advanced language model powering the new version of the assistant. Furthermore, it seems Amazon has shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services.
Amazon has countered claims from its former employees, asserting they are misinformed about the current state of its Alexa AI projects. The company maintains that its Artificial General Intelligence team has access to in-house Trainium chips and Nvidia GPUs, emphasizing that its goal is to create the best personal assistant in the world.