Amazon’s ambition to profit from its Alexa-enabled devices has reportedly backfired, leading to significant financial losses for the company. According to a report from the Wall Street Journal, internal documents and sources indicate that Amazon incurred losses exceeding $25 billion from devices like Echo and Kindle between 2017 and 2021. Despite claiming hundreds of millions of customers for these devices, the usage of Alexa-enabled Echo speakers appears to be primarily for setting alarms and accessing free apps, rather than shopping on Amazon.
A former senior employee expressed concerns about the situation, pointing out that the company had invested heavily in hiring and technology without substantial returns. In response to these challenges, CEO Andy Jassy is seeking solutions, including the introduction of a paid version of Alexa. However, some engineers reportedly doubt that this strategy will be effective.
An Amazon spokesperson emphasized the focus on creating value for customers beyond just device sales, claiming that the Devices & Services division has successfully established profitable ventures and is poised to continue doing so.
In another development, Amazon’s new AI-enhanced version of Alexa, which was showcased in September, is reportedly far from completion. Former employees have indicated that the company lacks sufficient data and access to the necessary chips to support the advanced language model behind the updated virtual assistant. Additionally, Amazon has purportedly shifted its focus from this project to prioritize generative AI for its Amazon Web Services cloud computing branch.
Amazon has responded to these assertions by claiming that the former employees are misinformed about the company’s current AI initiatives, stating that the Amazon Artificial General Intelligence team has access to required in-house chips and Nvidia GPUs. The company maintains its objective of creating the world’s best personal assistant.