Amazon’s efforts to profit from its Alexa-enabled devices have not been successful, reportedly costing the company billions. Between 2017 and 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices, according to the Wall Street Journal, which cited internal documents and sources familiar with the situation. Despite having hundreds of millions of customers, the usage of Alexa-enabled Echo speakers has been primarily for functions like setting alarms 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.”
In response, CEO Andy Jassy is seeking solutions, including the potential launch of a paid tier for Alexa. However, some engineers on the paid version of Alexa expressed doubts about its impact.
An Amazon spokesperson emphasized the company’s focus on creating value for customers using its services beyond device sales. They noted that the Devices & Services organization has established several profitable businesses and is well-positioned for future growth.
On another note, Amazon’s latest AI-enhanced version of Alexa, which was showcased in September, is reportedly far from ready. Former employees highlighted that the company lacks sufficient data and access to the necessary hardware to support the advanced language model that underpins the new assistant. Moreover, Amazon has allegedly shifted its focus towards generative AI development for its cloud computing division, Amazon Web Services.
In contrast, Amazon refuted claims made by former employees, asserting that its Artificial General Intelligence team has access to crucial hardware like in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to building the world’s best personal assistant.