Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly fallen short, resulting in substantial financial losses for the company. According to internal documents and sources familiar with the matter, the online retail giant lost more than $25 billion from its Echo, Kindle, and other devices between 2017 and 2021.
Despite boasting hundreds of millions of customers for its devices, the Echo speakers equipped with Alexa are primarily used for setting alarms and other free applications rather than for shopping on Amazon. A former senior Amazon employee expressed concern about the situation, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the financial setbacks, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid version express skepticism about its potential effectiveness.
An Amazon spokesperson stated, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” emphasizing that the Devices & Services division has established several profitable businesses for the company and is positioned to continue this trend.
In addition, the new AI-powered Alexa that was demonstrated in September is reportedly far from ready for launch, according to former employees. The company faces challenges with data availability and access to the necessary chips to operate the large language model driving the new version of its virtual assistant. It has also been reported that Amazon has shifted its focus from Alexa to developing generative AI for its cloud services division, Amazon Web Services.
Amazon has disputed claims made by former employees, asserting that they are incorrect about the current status of its Alexa AI initiatives. The company has assured that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reiterating that the goal remains to develop the world’s leading personal assistant.