Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly been unsuccessful, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon has attracted hundreds of millions of customers to its devices, it’s reported that the Alexa-enabled Echo speakers are primarily used for basic functions such as setting alarms rather than shopping.
A former senior employee expressed concern about the direction of Alexa’s development, 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 seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers working on this version of Alexa are skeptical about its potential to drive significant change.
An Amazon spokesperson highlighted that the company is concentrating on the value provided to customers through its services rather than just device sales. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward,” the spokesperson stated.
Additionally, it has been reported that the new artificial intelligence-powered version of Alexa, showcased in September, is not yet ready for deployment. According to former employees, the company lacks sufficient data and access to the necessary chips for the advanced large language model that will support the new assistant. Furthermore, Amazon has allegedly shifted its focus from AI-enhanced Alexa towards developing generative AI for its cloud computing division, Amazon Web Services.
In defense of its efforts, Amazon has countered claims from former employees, asserting that they are misinformed about the current status of Alexa’s AI initiatives. The company maintains that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units. Amazon reiterated its commitment to creating “the world’s best personal assistant” with its Alexa project.