Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, costing the company billions of dollars. The Wall Street Journal revealed that Amazon lost over $25 billion on devices like the Echo and Kindle between 2017 and 2021, based on internal documents and sources familiar with the company’s situation. Despite having hundreds of millions of customers, usage of Alexa-enabled Echo speakers tends to focus more on alarms and free applications rather than shopping.
A former senior employee expressed concerns about the efficiency of the workforce, 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 exploring solutions, including the introduction of a paid tier for the voice assistant. However, some engineers involved in the project are skeptical about its potential impact.
An Amazon spokesperson emphasized their commitment to generating value from customer interactions with their services, not just through device sales. They asserted that the Devices & Services division has successfully established several profitable ventures for the company and is poised for further success.
Additionally, the rollout of Amazon’s new AI-powered Alexa, which was previewed in September, is reportedly facing delays. Former employees have indicated that the company lacks sufficient data and the necessary hardware to implement the advanced language model driving the updated virtual assistant. Amazon is said to have shifted its focus from enhancing Alexa to investing in generative AI for its Amazon Web Services cloud division.
In rebuttal, Amazon stated that the claims made by former employees regarding its AI progress are inaccurate, asserting that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company remains committed to creating “the world’s best personal assistant.”