Amazon’s attempt to generate revenue from its Alexa-enabled devices has reportedly resulted in significant financial losses for the company, amounting to billions of dollars.
According to internal documents and sources familiar with the situation, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Despite boasting hundreds of millions of users for these devices, it appears that Amazon’s Echo speakers are predominantly utilized for basic functions like setting alarms and using free apps rather than shopping on Amazon itself.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for Alexa. However, some engineers involved in the project are skeptical, fearing it will not lead to meaningful changes.
An Amazon spokesperson emphasized the company’s focus on the value created for customers through its services, rather than just device sales. They highlighted that Amazon’s Devices & Services organization has established several profitable ventures and is well-positioned for future success.
Additionally, Amazon’s newly announced AI-powered version of Alexa, which was showcased in September, is said to be far from ready, as per insights from former employees. The company is reportedly lacking sufficient data and access to the necessary advanced chips to support its large language model. Moreover, Amazon is said to have shifted its focus to developing generative AI technology for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon countered that its former employees are misinformed about its AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to the required Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing the best personal assistant in the world.