Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly resulted in significant financial losses for the company, amounting to over $25 billion between 2017 and 2021. According to internal documents and sources familiar with the situation, despite having hundreds of millions of customers using devices like the Echo and Kindle, many users primarily utilize the Echo speakers for basic functions such as setting alarms, rather than for making purchases on Amazon.
A former senior employee expressed concerns about the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon’s CEO Andy Jassy is exploring solutions, including the potential introduction of a paid version of Alexa. However, some engineers involved in the project have expressed skepticism about its effectiveness.
An Amazon spokesperson countered that the company is prioritizing the value created when customers engage with its services, rather than solely focusing on device sales. The Devices & Services organization is said to have built several profitable businesses and is positioned for continued success.
Additionally, reports suggest that Amazon’s new AI-enhanced Alexa, showcased in September, is not yet ready for launch due to a lack of necessary data and hardware capabilities to support the advanced language model. Instead, the company is reportedly shifting its focus to generative AI for Amazon Web Services.
Amazon has pushed back against claims from former employees, asserting that its AI development team has access to the required resources, including in-house chips and Nvidia GPUs, and reaffirmed its commitment to building the best personal assistant available.