Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to a report by the Wall Street Journal, the online retail giant incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Internal documents and sources familiar with the situation indicate that while Amazon has amassed hundreds of millions of customers for its devices, Alexa-enabled Echo speakers are predominantly used for basic functions like setting alarms rather than 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,” highlighting the inefficacy of the current approach.
In response, Amazon CEO Andy Jassy is exploring solutions, including launching a paid tier for its voice assistant. However, some engineers involved in developing this paid version express skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value through its services, rather than just device sales, pointing out that its Devices & Services organization has established several profitable ventures and remains well-positioned for future growth.
In addition, Amazon’s recently demoed artificial intelligence-powered Alexa is reportedly far from ready, according to former employees. The company is said to lack sufficient data and the necessary chips to effectively operate the new large language model driving this version of Alexa. Furthermore, Amazon has allegedly shifted its priorities towards generative AI development for its cloud computing division, Amazon Web Services.
Amazon refuted claims from former employees, asserting that they are misinformed about the current status of Alexa’s AI initiatives. The company stated that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs), maintaining that the goal for Alexa remains the same: to create the world’s best personal assistant.