Amazon’s strategy to profit from its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion from 2017 to 2021, as detailed in a Wall Street Journal report based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers, Amazon’s Echo speakers are primarily used for setting alarms and utilizing free applications rather than for shopping on the platform.
A former senior employee expressed concerns about the effectiveness of their investments, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the ongoing challenges, Amazon CEO Andy Jassy is reportedly initiating a paid version of Alexa. However, some engineers developing this version are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the overall value created when customers use its services beyond device purchases, claiming that the Devices & Services division has established multiple profitable ventures.
Additionally, reports suggest that Amazon’s new AI-powered Alexa, showcased in September, may not be near completion due to insufficient data and a lack of access to necessary processing units for the large language model. The company has allegedly shifted its focus from developing the AI version of Alexa to enhancing generative AI within its cloud services, Amazon Web Services.
In response to these concerns, Amazon disputed the claims made by former employees, asserting that the Amazon Artificial General Intelligence team has the required resources, including in-house chips and Nvidia GPUs, to realize their vision for Alexa as the world’s leading personal assistant.