Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly failed to deliver, causing the company to incur losses exceeding $25 billion from 2017 to 2021, as per internal documents and sources familiar with the situation.
Despite having hundreds of millions of users for its devices, analysis suggests that the primary use of Alexa-enabled Echo speakers tends to revolve around setting alarms and utilizing free applications, rather than facilitating purchases on Amazon.
A former senior employee expressed concerns about the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is exploring solutions, including the introduction of a paid version of the voice assistant. However, some engineers involved in this initiative reportedly doubt its potential to effect any significant change.
An Amazon spokesperson emphasized the company’s focus on the value created through customer engagement with its services, rather than solely on device sales. They noted that the Devices & Services organization has successfully established several profitable businesses and is poised to continue this trajectory.
In addition, Amazon’s recent advancements in AI, specifically a new version of Alexa revealed in September, may still be underdeveloped. Former employees indicated that the company lacks sufficient data and access to the necessary chips for executing the advanced language model that would enhance this virtual assistant. Reports suggest that Amazon is shifting its focus towards developing generative AI for its cloud services division, Amazon Web Services.
Amazon has countered claims from former employees, asserting that they are misinformed regarding current Alexa AI projects. The company maintains that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Furthermore, Amazon is committed to its goal of creating the world’s leading personal assistant.