Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded expected results, leading to significant financial losses for the company. According to reports, Amazon suffered losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, as cited by the Wall Street Journal, which referenced internal documents and sources familiar with the situation. Despite having hundreds of millions of users for its devices, the Alexa-enabled Echo speakers are predominantly used for setting alarms and utilizing free applications rather than making purchases through Amazon.
A former senior employee expressed concerns about the investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the project have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services rather than solely focusing on device sales. They stated, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Additionally, the new AI-powered version of Alexa, showcased in September, is reportedly not close to completion, according to some former employees. They noted that Amazon lacks sufficient data and access to the necessary chips for the large language model (LLM) driving the new assistant. Furthermore, the company has reportedly shifted its focus away from AI for Alexa to prioritize generative AI for its cloud computing division, Amazon Web Services.
Amazon has disputed claims made by its former employees, asserting that they are misinformed regarding current efforts related to Alexa AI. The company stated that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs) and affirmed its goal to create “the world’s best personal assistant.”