Amazon’s initiative to profit from its Alexa-enabled devices has reportedly not succeeded, resulting in substantial financial losses for the company. Between 2017 and 2021, Amazon incurred losses exceeding $25 billion due to its Echo, Kindle, and other devices, as revealed by the Wall Street Journal, which relied on internal documents and anonymous sources familiar with the situation. Despite having hundreds of millions of customers for its devices, users of the Alexa-enabled Echo speakers primarily utilize them for basic functions like setting alarms and using free applications, rather than making purchases through Amazon.
A former senior employee expressed concerns about the situation, highlighting the paradox of having expanded staff while creating limited utility. In response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. Nonetheless, some engineers involved in developing this paid version of Alexa have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company prioritizes the value generated by customer usage of its services, rather than just sales of its devices. They pointed out that the Devices & Services organization has successfully created various profitable ventures and is positioned to continue this trend.
In addition, Amazon’s new AI-enhanced version of Alexa, which was showcased in September, is reportedly not yet ready, according to some former employees. The company is said to lack sufficient data and access to the necessary chips for running the large language model supporting this new iteration of its virtual assistant. There have also been claims that Amazon has shifted focus from AI development for Alexa to generative AI for its cloud computing division, Amazon Web Services.
Amazon has countered these claims from former employees, asserting that they are misinformed regarding its current AI endeavors for Alexa. The company affirmed that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units. Amazon remains committed to its goal of developing the best personal assistant in the world.