Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, as revealed by internal documents and sources familiar with the situation. Despite having hundreds of millions of users, the Echo speakers are primarily utilized for basic tasks like setting alarms rather than for shopping on Amazon.
A former senior Amazon employee expressed concern about the company’s direction, 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 seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in developing this paid tier are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value created when customers engage with its services, not solely when they purchase devices. They noted that the Devices & Services organization has successfully established several profitable ventures for Amazon.
Meanwhile, the company’s new AI-powered version of Alexa, showcased in September, is reportedly far from ready, according to former employees. Issues such as insufficient data and limited access to necessary chips have hindered progress on the large language model supporting the updated virtual assistant. Furthermore, Amazon has allegedly shifted priorities to concentrate on developing generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon has asserted that its former employees are misinformed regarding its Alexa AI initiatives and that the Amazon Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to building “the world’s best personal assistant.”