Amazon’s strategy to profit from its Alexa-enabled devices has not met expectations, reportedly resulting in losses amounting to over $25 billion from 2017 to 2021. According to internal documents and anonymous sources cited by the Wall Street Journal, the online retail giant’s Echo, Kindle, and other devices have not generated the anticipated revenue. Despite Amazon’s vast user base for its devices, data suggests that many consumers primarily use the Echo speakers for basic functions like setting alarms rather than engaging in purchases.
A former senior Amazon employee highlighted concerns about the company’s workforce expansion aimed at developing useful technology, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is seeking solutions, including the development of a paid version of Alexa. However, some engineers involved in this project have expressed skepticism regarding its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value created through its services, rather than solely on sales from devices. They pointed out that the Devices & Services division has established several profitable ventures and is positioned to continue this trajectory.
In addition, Amazon’s latest iteration of Alexa that integrates artificial intelligence, showcased in September, is reportedly far from completion. Former employees claim the company lacks sufficient data and access to the necessary chips to support the advanced language model that would power this new version. Furthermore, Amazon is said to have shifted its focus towards developing generative artificial intelligence for its cloud service, Amazon Web Services, potentially sidelining progress on AI for Alexa.
In response to these criticisms, Amazon contended that its former employees are misinformed about the company’s AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to creating what it aims to be the world’s leading personal assistant.