Amazon’s efforts to profit from its Alexa-enabled devices have reportedly resulted in substantial losses, costing the company over $25 billion between 2017 and 2021, according to the Wall Street Journal. Internal documents and sources familiar with the situation reveal that while Amazon has attracted hundreds of millions of users to its devices, many are primarily used for free tasks like setting alarms rather than for shopping on its platform.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, CEO Andy Jassy is seeking solutions, including plans to introduce a paid tier for the Alexa voice assistant. However, some engineers working on this version have doubts about its potential success.
An Amazon spokesperson emphasized that the company is focused on the value generated through customer interactions with its services, not just through device sales. The spokesperson noted that the Devices & Services division has established several profitable ventures and is well-positioned for future growth.
Additionally, reports indicate that Amazon’s new AI-powered version of Alexa, showcased in September, may still be far from completion. Former employees mentioned that the company lacks sufficient data and the necessary processing chips to effectively implement the new large language model for the assistant. Furthermore, Amazon has reportedly shifted its focus toward developing generative AI for its cloud computing service, Amazon Web Services, rather than prioritizing the AI-powered Alexa.
In response, Amazon disputed the claims made by its former employees, asserting that they are misinformed regarding the current progress of its Alexa AI initiatives. The company reaffirmed its commitment to creating “the world’s best personal assistant,” backed by access to both in-house Trainium chips and Nvidia GPUs.