Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, Amazon experienced over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from anonymous sources.
Despite boasting hundreds of millions of customers for its devices, many users primarily utilize the Alexa-enabled Echo speakers for basic tasks like setting alarms and accessing free applications, rather than for shopping on Amazon. A former senior Amazon employee expressed concerns about the situation, 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 reportedly seeking solutions and is set to introduce a paid version of its voice assistant. However, some engineers involved in the development of this paid tier are skeptical about its potential success.
An Amazon spokesperson emphasized the company’s focus on the value created for customers using its services beyond just device sales, noting that its Devices & Services division has successfully established multiple profitable businesses.
Meanwhile, the development of Amazon’s new AI-powered Alexa, showcased in September, is reportedly lagging behind schedule. Former employees have indicated that the company lacks sufficient data and essential chips needed to support the large language model that drives this upgraded virtual assistant. Additionally, the focus has shifted towards enhancing generative AI for Amazon Web Services, sidelining the AI-powered Alexa initiative.
In response to these criticisms, Amazon rejected claims from former employees, asserting that the Amazon Artificial General Intelligence team has access to necessary technology, including in-house Trainium chips and Nvidia GPUs. The company remains committed to its goal of creating the world’s leading personal assistant.