Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, with the company losing billions. According to internal documents and sources cited by the Wall Street Journal, Amazon incurred losses exceeding $25 billion from 2017 to 2021 related to its Echo, Kindle, and other devices. Despite having hundreds of millions of customers for these gadgets, the Alexa-enabled Echo speakers are allegedly utilized more for basic functions like setting alarms rather than for making purchases.
A former senior Amazon employee was quoted expressing concerns about the direction of the project, 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 seeking solutions and is reportedly introducing a paid version of its voice assistant. However, some engineers involved with the new Alexa express skepticism about its potential impact.
An Amazon spokesperson emphasized the company’s focus on creating value for customers using its services rather than solely through device sales. The spokesperson highlighted that Amazon’s Devices & Services division has established several profitable ventures and is positioned for continued success.
Simultaneously, reports emerge that Amazon’s new AI-powered Alexa, which was showcased in September, is far from completion. Former employees suggest that the company lacks sufficient data and the required chips to support the advanced language model underlying the updated assistant. Furthermore, it appears Amazon is prioritizing the development of generative AI for its cloud computing arm, Amazon Web Services, over Alexa.
In response to these concerns, Amazon contends that criticisms from former employees are inaccurate regarding its current AI projects for Alexa. The company asserts that its Artificial General Intelligence team has access to necessary resources, including both in-house Trainium chips and Nvidia GPUs, and remains committed to its goal of creating the leading personal assistant.