Amazon’s efforts to profit from its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. Between 2017 and 2021, Amazon lost more than $25 billion from its Echo, Kindle, and other device lines, according to internal documents and sources familiar with the matter.
Despite having hundreds of millions of customers using these devices, the Alexa-enabled Echo speakers are primarily utilized for simple tasks like setting alarms and accessing free applications, rather than for shopping on Amazon.
A former high-level employee expressed concerns about the company’s direction, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid version of Alexa. However, some engineers involved in this initiative are skeptical about its potential impact.
An Amazon spokesperson emphasized the importance of the value created when customers use the company’s services, rather than just the sales from devices. They noted that the Devices & Services organization has generated several profitable ventures for Amazon and is poised for future success.
Concurrent with these developments, reports suggest that Amazon’s new AI-driven version of Alexa, showcased in September, is not fully ready. Concerns have been raised about insufficient data and limited access to the necessary chips for running the advanced language model behind the new assistant. Additionally, the company has reportedly shifted its focus to enhance generative AI for its cloud division, Amazon Web Services.
In response to the claims from former employees, Amazon asserted that these individuals are misinformed regarding the company’s current AI efforts and highlighted that the Amazon Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing the best personal assistant in the world.