Amazon’s initiative to profit from its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company. According to internal documents and sources familiar with the matter, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, as reported by the Wall Street Journal. While Amazon boasts hundreds of millions of customers for its devices, it seems that consumers primarily use Alexa-enabled Echo speakers for simple tasks like setting alarms, rather than for shopping.
A former senior employee expressed concern, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is seeking solutions and is said to be planning a paid version of the voice assistant. However, some engineers involved in this project have expressed doubts about its potential success, according to the Wall Street Journal.
An Amazon representative commented, “We are 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 going forward.”
In another development, Amazon’s newly unveiled AI-driven Alexa, demonstrated in September, is reportedly not ready yet, according to former staff members. The company allegedly lacks sufficient data and access to the necessary chips to operate the advanced language model for the new version. Furthermore, Amazon has reportedly prioritized generative AI development for its cloud computing division, Amazon Web Services, over the AI-powered Alexa.
In defense of its initiatives, Amazon stated that the claims from former employees are inaccurate and that the Amazon Artificial General Intelligence team has access to the required in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to building the world’s leading personal assistant.