Amazon’s efforts to profit from its Alexa-enabled devices have reportedly resulted in significant losses, exceeding $25 billion from 2017 to 2021, according to a report from the Wall Street Journal based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers using its devices, the Alexa-powered Echo speakers are primarily utilized for tasks like setting alarms rather than making purchases on Amazon.
A former senior employee expressed concerns about the hiring of 10,000 people to develop what they referred to as a “smart timer.” In response to these challenges, Amazon’s CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved with this project have reservations about its potential effectiveness.
An Amazon spokesperson emphasized the importance of the value generated from customer engagement beyond just hardware sales, highlighting that the company’s Devices & Services division has successfully established several profitable ventures.
In addition, the company’s new AI-enhanced Alexa, showcased in September, is said to still be in development and far from completion, according to former employees. They noted a lack of sufficient data and access to necessary chips for operating the advanced language model that powers the updated assistant. Furthermore, Amazon has reportedly shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services, rather than prioritizing the AI-driven Alexa.
In response to these criticisms, Amazon contended that the insights from former employees are inaccurate and asserted that its Amazon Artificial General Intelligence team has the required resources, including both in-house Trainium chips and Nvidia GPUs, to fulfill its ambition of creating the best personal assistant available.