Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly fallen short, costing the company billions of dollars. According to internal documents and insights from sources familiar with the situation, the online retail giant experienced losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of users, Amazon’s Echo devices, powered by Alexa, are primarily used for tasks such as setting alarms and utilizing free applications rather than facilitating purchases on Amazon. A former senior employee expressed concerns by 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, which includes the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid-tier Alexa are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on overall customer value beyond just device sales, claiming that its Devices & Services division has established several profitable ventures and is positioned for future success.
At the same time, reports indicate that Amazon’s new AI-enhanced Alexa, unveiled in September, is far from ready for launch. Former employees suggest that the company lacks sufficient data and access to critical components, such as chips, necessary for running the advanced large language model behind the new assistant. Furthermore, Amazon is said to be prioritizing generative AI efforts for its cloud computing platform, Amazon Web Services, over the AI-powered Alexa.
In response to these criticisms, Amazon has asserted that these former employees’ assessments are incorrect and that its Artificial General Intelligence team has the necessary resources, including both in-house and Nvidia GPUs. The company’s commitment to building the best personal assistant remains unchanged.