Amazon’s strategy to profit from its Alexa-enabled devices has reportedly failed, resulting in significant financial losses for the company. According to internal documents and unnamed sources quoted by the Wall Street Journal, Amazon lost over $25 billion from devices like the Echo and Kindle between 2017 and 2021. While the company boasts hundreds of millions of customers, the Echo speakers are primarily used for functions such as setting alarms, rather than for shopping.
A former senior employee expressed concerns about the effectiveness of the products developed, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon’s CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for Alexa. However, some engineers involved in this project have doubts regarding its potential impact.
An Amazon spokesperson emphasized the company’s commitment to creating value beyond just the sale of devices, asserting that their Devices & Services division has established various profitable ventures and is poised for future success.
In addition, Amazon’s revamped AI version of Alexa, which was previewed in September, is reportedly not yet ready. Insiders have indicated that the company lacks sufficient data and resources, including the necessary chips, to support the new large language model powering the upgraded assistant. It appears that the company has also shifted its focus toward developing generative AI for its cloud computing service, Amazon Web Services.
In response to criticisms from former employees, Amazon stated that they are poorly informed about the current AI initiatives. They asserted that the Amazon Artificial General Intelligence team has access to essential resources, including in-house chips and Nvidia GPUs, and reaffirmed their goal of creating the world’s best personal assistant with Alexa.