Amazon’s initiative to generate revenue from its Alexa-enabled devices has reportedly been disappointing, with the company facing significant losses amounting to billions of dollars.
The Wall Street Journal has revealed, referencing internal documents and unnamed sources, that the online retail giant incurred over $25 billion in losses related to its Echo, Kindle, and other devices from 2017 to 2021. Despite having hundreds of millions of customers for its products, it appears that the Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms, rather than for making purchases on Amazon.
A former senior Amazon employee expressed concern to the Wall Street Journal, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the situation, Amazon’s CEO Andy Jassy is seeking solutions and is reportedly planning to introduce a paid version of its voice assistant. However, sources indicated to the Wall Street Journal that some engineers working on the paid version of Alexa are doubtful about its potential impact.
An Amazon spokesperson commented, “We’re focused on the value we create when customers use our services, not just when they buy our devices. Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so.”
Additionally, the newly introduced AI-powered Alexa, showcased in September, is reportedly far from being ready, according to former employees. They claim that the company lacks sufficient data and access to the required chips for implementing the large language model that will power the new virtual assistant. Moreover, Amazon has allegedly shifted its focus toward developing generative AI for its cloud computing unit, Amazon Web Services.
In response to these claims, Amazon stated that its former employees possess inaccurate information about its ongoing Alexa AI projects and affirmed that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company remains committed to its goal of developing “the world’s best personal assistant.”