Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly failed, leading to substantial financial losses for the company. Internal documents and insights from unnamed sources indicate that Amazon lost over $25 billion on products like Echo and Kindle from 2017 to 2021, according to the Wall Street Journal. Despite having hundreds of millions of customers, it seems that Alexa-enabled Echo speakers are primarily used for simple functions like setting alarms and using free applications, rather than for making purchases on Amazon.
A former senior employee expressed concerns about the company’s direction, questioning the value of hiring thousands of staff to create devices primarily used for basic tasks.
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved in developing this new version of Alexa harbor doubts about its potential success.
An Amazon representative asserted that the company is dedicated to enhancing the value of its services beyond just device sales. They noted that Amazon’s Devices & Services division has already established several profitable ventures and is well-positioned for future growth.
On the technology front, Amazon recently unveiled a new AI-driven version of Alexa; however, reports suggest it is far from ready. Former employees claim that the company lacks sufficient data and access to the necessary hardware to support the advanced language model behind the updated assistant. Furthermore, there are indications that Amazon has shifted its focus towards developing generative AI for its cloud computing service, Amazon Web Services, sidelining the progression of the AI-powered Alexa.
In response to these criticisms, Amazon has stated that concerns from former employees are misleading, insisting that the company’s Artificial General Intelligence team has access to key resources such as their own Trainium chips and Nvidia GPUs. They reaffirmed their commitment to creating the best personal assistant in the world.