Amazon’s ambition to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. Between 2017 and 2021, Amazon is said to have incurred losses exceeding $25 billion from products like the Echo and Kindle, according to the Wall Street Journal, which cited internal documents and anonymous sources familiar with the situation.
Despite having hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers are primarily utilized for basic functions such as setting alarms rather than for shopping on Amazon. A former senior Amazon employee expressed concerns about the company’s investment, stating, “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 reportedly exploring solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the project are skeptical about its potential to succeed, as indicated by discussions with the Wall Street Journal.
An Amazon spokesperson emphasized the company’s focus on the value created through its services rather than solely device sales, claiming that its Devices & Services organization has established multiple profitable ventures and is positioned for future success.
Additionally, reports suggest that Amazon’s new AI-powered version of Alexa, showcased in September, is not yet ready for deployment. Former employees allege that the company lacks sufficient data and necessary chips to operate the large language model that will drive this new iteration. Furthermore, it’s been reported that Amazon has shifted its priorities towards developing generative AI for its cloud computing division, Amazon Web Services.
In response, Amazon contends that these former employees are misguided about its current AI initiatives, stating that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to building what it believes will be the best personal assistant in the world.