Amazon’s initiative to monetize its Alexa-enabled devices has not yielded the expected results, leading to losses amounting to billions of dollars for the company, according to recent reports.
The online retailer suffered a staggering loss of over $25 billion from its Echo and Kindle devices between 2017 and 2021, as revealed by the Wall Street Journal, which referenced internal documents and sources familiar with the situation. Despite having hundreds of millions of customers using its devices, data suggests that the Alexa-enabled Echo speakers are primarily utilized for setting alarms and accessing free applications rather than shopping on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” Now, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers working on this project reportedly doubt its potential effectiveness.
An Amazon spokesperson emphasized that the company prioritizes the value generated from customer interactions with its services beyond merely selling devices. The spokesperson claimed that the Devices & Services division has successfully established several profitable business lines for Amazon, positioning the company for future success.
In another development, Amazon’s newly designed AI-powered Alexa, which was showcased in September, is reportedly not yet fully operational, according to former employees. They indicated that the company lacks sufficient data and access to the necessary chips to support the large language model driving the new virtual assistant. Additionally, Amazon has allegedly shifted its focus away from the AI-enabled Alexa in favor of enhancing its generative AI offerings for its cloud computing division, Amazon Web Services.
In response to these challenges, Amazon contended that the assessments of former employees are inaccurate regarding its AI efforts, asserting that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia graphics processing units (GPUs). The company’s goal for Alexa remains unchanged: to develop the world’s leading personal assistant.