Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly backfired, leading the company to incur losses amounting to billions of dollars. According to the Wall Street Journal, Amazon lost over $25 billion on devices such as the Echo and Kindle from 2017 to 2021, based on internal documents and sources familiar with the matter. Despite hundreds of millions of customers using these devices, the Alexa-enabled Echo speakers appear to be more frequently utilized for basic functions like setting alarms rather than for shopping on Amazon.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In an effort to address these issues, Amazon CEO Andy Jassy is reportedly exploring the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid version are skeptical about its potential impact.
An Amazon spokesperson noted, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” emphasizing that the Devices & Services organization has built several profitable ventures for Amazon and is positioned to continue achieving success.
In addition, Amazon’s AI-enhanced version of Alexa, showcased in September, is said to be far from ready, as reported by former employees. The company reportedly lacks sufficient data and access to the chips necessary to support the large language model that powers the new iteration of its virtual assistant. Furthermore, Amazon has shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services, which has resulted in AI-powered Alexa being deprioritized.
In response to these claims, Amazon contends that its former employees are mistaken regarding its Alexa AI efforts, asserting that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units. The company maintains that its objective for Alexa remains unchanged: to create the world’s best personal assistant.