Amazon’s strategy to generate revenue from its Alexa-enabled devices appears to have backfired, resulting in significant financial losses for the company. According to reports from the Wall Street Journal, Amazon incurred losses exceeding $25 billion 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, the Echo speakers, which run on Alexa, are primarily used for simple tasks such as setting alarms rather than for making purchases 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 response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers involved in developing this paid version have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value generated through customer engagement with its services beyond just device sales, asserting that the Devices & Services organization has created several profitable ventures for Amazon and remains well-positioned for future success.
In another development, Amazon’s new AI-enhanced version of Alexa, showcased in September, is reportedly still in early stages of development. Former employees claim that the company lacks sufficient data and the necessary chips to support the large language model (LLM) that would drive the upgraded assistant. Additionally, Amazon has allegedly prioritized generative AI efforts for its cloud computing division, Amazon Web Services, over enhancing Alexa.
In response to these criticisms, Amazon countered that its former employees are misinformed regarding its current AI initiatives. The company stated that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs, maintaining that their goal remains to create the best personal assistant available.