Amazon’s venture into monetizing its Alexa-enabled devices has reportedly not yielded the expected returns, with the company facing losses amounting to billions. From 2017 to 2021, Amazon is said to have lost over $25 billion on its Echo, Kindle, and similar devices, according to reports citing internal documents and sources familiar with the situation.
Despite having hundreds of millions of customers for its devices, the Echo speakers equipped with Alexa are primarily used for basic functions like setting alarms and accessing free applications, rather than for shopping on Amazon, as per the Wall Street Journal.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers working on this new tier have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s commitment to creating value through the usage of its services beyond merely selling devices, asserting that the Devices & Services division has built several profitable operations and is positioned for future growth.
In addition, the new AI-enhanced version of Alexa, recently showcased, is believed to be far from ready, according to former employees. The company is reportedly lacking sufficient data and necessary chips to support the advanced language model driving this update. Furthermore, it appears that Amazon has shifted its focus towards generative AI for its cloud computing service, Amazon Web Services, rather than prioritizing the AI development for Alexa.
In response to these claims, Amazon has disputed the accuracy of former employees’ assessments regarding its current AI initiatives for Alexa. The company stated that its Artificial General Intelligence team is equipped with both in-house Trainium chips and Nvidia GPUs, maintaining its goal to create the world’s best personal assistant.