Amazon’s strategy to profit from its Alexa-enabled devices has apparently backfired, leading to significant financial losses for the company. According to reports, the retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from unnamed sources. Despite the existence of hundreds of millions of customers using these devices, it seems that the Alexa-enabled Echo speakers are predominantly utilized for setting alarms and accessing free applications rather than shopping on Amazon.
A former senior employee expressed concerns about the project, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions and plans to introduce a paid version of its voice assistant. However, engineers associated with the project are skeptical that this change will significantly impact usage.
In a statement, an Amazon spokesperson emphasized the company’s focus on the value delivered to customers through their services rather than solely through device sales. They noted that the Devices & Services organization has successfully established multiple profitable enterprises for Amazon and is poised to continue its growth.
In addition, Amazon’s newly developed AI-powered Alexa, which was showcased in September, is reportedly still in its early stages, as former employees mentioned that the company lacks sufficient data and the necessary chips to support the large language model behind the new assistant. Furthermore, it appears that Amazon has shifted its focus from enhancing AI for Alexa to concentrate on generative AI initiatives within its cloud computing division, Amazon Web Services.
Amazon has responded to claims from former employees, asserting that they are misinformed regarding the current state of the Alexa AI project. The company stated that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. They reaffirmed their goal to develop “the world’s best personal assistant.”