Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly faltered, leading to significant financial losses for the company, estimated at over $25 billion from 2017 to 2021. According to internal documents and sources familiar with the situation, the online retail giant has seen its Echo, Kindle, and other devices underperform. Despite having hundreds of millions of customers, the Echo speakers are primarily used for setting alarms and utilizing free applications, rather than for making purchases on Amazon.
Concerns about the effective use of resources have surfaced, with a former senior employee noting, “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 reportedly exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers involved in the development of this version express skepticism about its potential success.
An Amazon spokesperson stated, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” highlighting that the Devices & Services organization has established profitable businesses and is poised to continue on this trajectory.
Additionally, the new AI-powered version of Alexa, which was showcased in September, is reportedly not yet ready for deployment. Former employees noted that Amazon lacks sufficient data and the necessary chip access to support the large language model driving this advanced version. The company has also shifted its priorities to concentrate on generative AI advancements for its cloud computing division, Amazon Web Services.
In response to criticisms from former employees, Amazon asserted that their claims are inaccurate and that the Amazon Artificial General Intelligence team has access to needed resources, including in-house Trainium chips and Nvidia GPUs. The company maintains that its goal remains to develop the world’s most capable personal assistant.