Amazon’s ambition to generate revenue from its Alexa-enabled devices has reportedly faltered, leading the company to incur losses amounting to billions of dollars. According to a report from the Wall Street Journal, the online retail powerhouse lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources.
Despite counting hundreds of millions of customers for its devices, Alexa-enabled Echo speakers are primarily utilized for setting alarms and using free applications rather than facilitating purchases on Amazon. A former senior 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 its voice assistant. However, members of Amazon’s engineering team working on this paid version have expressed doubts about its potential impact.
An Amazon spokesperson clarified that the company is concentrating on the value created for customers through its services rather than solely on device sales. They emphasized that the Devices & Services organization has generated multiple profitable ventures for Amazon and is well-prepared for future success.
On another note, Amazon’s new AI-driven Alexa, which was demonstrated in September, is reportedly not ready for deployment, according to former employees. The company apparently lacks sufficient data and the necessary chips to operate the large language model that powers this upgraded virtual assistant. Reports indicate that Amazon has shifted its focus from developing AI for Alexa to advancing generative AI within its cloud computing division, Amazon Web Services.
Amazon has disputed the claims made by former employees, asserting that they are misinformed about the current status of Alexa’s AI initiatives. The company maintains that its Artificial General Intelligence team has access to both its own Trainium chips and Nvidia GPUs, and it remains committed to its goal of building the foremost personal assistant.