Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. Internal documents and anonymous sources cited by the Wall Street Journal indicate that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers for its devices, the usage of its Alexa-enabled Echo speakers primarily revolves around setting alarms and using free applications, rather than shopping.
A former senior Amazon employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” highlighting the disparity between investment and actual utility.
In light of these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid tier for its voice assistant. However, engineers involved in developing the paid version of Alexa have doubts about its potential success.
An Amazon spokesperson asserted that the company is focused on creating value through its services beyond just device sales. They emphasized that the Devices & Services division has successfully established several profitable ventures and is positioned for future growth.
Meanwhile, Amazon’s new AI-powered Alexa, which was showcased in September, is reportedly not ready for launch. Concerns have been raised by former employees regarding the lack of necessary data and access to the chips required to support the large language model driving the new iteration of the virtual assistant. Additionally, Amazon has shifted its focus toward enhancing generative AI capabilities within its Amazon Web Services cloud computing segment.
In response to these claims, Amazon stated that the assertions made by former employees are inaccurate and that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s commitment to developing “the world’s best personal assistant” remains unchanged.