Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded the anticipated results and is reportedly costing the company billions. According to a report by the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the matter. Despite having hundreds of millions of customers, the Echo speakers are primarily utilized for basic functions like setting alarms, rather than for shopping on Amazon.
A former senior employee expressed concerns about the company’s investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the setbacks, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in this development are skeptical about its potential impact.
An Amazon spokesperson clarified that the company is concentrating on the value created when customers use its services, not solely on device sales. They emphasized that Amazon’s Devices & Services division has developed several profitable ventures and remains well-positioned for future success.
In another development, Amazon’s next-generation AI-driven Alexa, unveiled in September, is reportedly not ready for deployment, as noted by former employees. Issues such as insufficient data and lack of access to essential chips for running the large language model have hindered progress. Additionally, Amazon has allegedly shifted its focus from enhancing Alexa to advancing generative AI for its cloud services platform, Amazon Web Services.
In response, Amazon stated that the claims made by former employees are inaccurate and that its Artificial General Intelligence team has access to the necessary resources, including in-house Trainium chips and Nvidia GPUs. The company’s goal for Alexa remains unchanged: to create the world’s best personal assistant.