Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, leading to substantial financial losses for the company. According to internal documents and sources cited by the Wall Street Journal, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers for its products, data suggests that its Alexa-enabled Echo speakers are primarily used for functions like setting alarms rather than for shopping, which negatively impacts sales.
A former senior employee expressed concerns about the company’s hiring strategy, noting, “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, with plans for a paid version of the voice assistant reportedly in the works. However, some engineers are doubtful that this approach will be effective.
An Amazon spokesperson emphasized the importance of the value provided through its services, stating that the Devices & Services organization has successfully established various profitable ventures for the company. The spokesperson reiterated the focus on enhancing customer experience over merely selling devices.
Furthermore, Amazon’s recently unveiled AI-powered Alexa is reportedly facing delays in readiness, as former employees revealed that the company lacks sufficient data and access to the necessary chips for the advanced language model driving the new assistant. There are indications that the company has shifted its focus towards developing generative AI for its cloud computing segment, Amazon Web Services, rather than prioritizing Alexa.
In response to these claims, Amazon contended that its former employees are misinformed and asserted that its Artificial General Intelligence team has adequate resources, including in-house Trainium chips and Nvidia GPUs, to continue its efforts. The company’s objective for Alexa remains focused on creating the world’s best personal assistant.