Amazon’s efforts to generate revenue through its Alexa-enabled devices have reportedly fallen short, resulting in significant financial losses for the company. From 2017 to 2021, Amazon is said to have lost over $25 billion on its Echo, Kindle, and other devices, according to a report by the Wall Street Journal citing internal documents and anonymous sources.
Despite having hundreds of millions of customers for its devices, the usage of Alexa-enabled Echo speakers has leaned more towards functions like setting alarms rather than facilitating online shopping. A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In an effort to address these challenges, Amazon CEO Andy Jassy is reportedly exploring the introduction of a paid tier for its voice assistant. However, some engineers working on this version of Alexa have expressed doubts about its potential effectiveness.
An Amazon spokesperson responded to the situation, emphasizing the company’s focus on creating value for customers using its services beyond just device sales. They claimed that the Devices & Services division has established several profitable businesses and is positioned for future growth.
Meanwhile, the new AI-powered version of Alexa, which Amazon showcased in September, is reportedly not yet fully ready for deployment, according to former employees. The company lacks sufficient data and access to necessary chips for the large language model driving the new assistant. Additionally, Amazon has shifted its priorities towards developing generative AI technologies for its cloud computing arm, Amazon Web Services.
In defense of its current initiatives, Amazon stated that its former employees are misinformed and that its artificial intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s commitment to improving Alexa remains unchanged, with a goal to create the world’s best personal assistant.