Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly been unsuccessful, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant has incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, the Echo speakers are primarily used for basic functions such as setting alarms, rather than for shopping.
A former senior employee noted concerns about the company’s hiring practices, voicing disappointment over the development of what they described as a “smart timer.” In response to these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid version of its voice assistant. However, some engineers fear that this might not yield the desired results.
An Amazon spokesperson emphasized the company’s focus on creating value for customers using its services, rather than solely on device sales. The spokesperson also claimed that the Devices & Services division is profitable and well-positioned for future success.
In addition, reports suggest that Amazon’s new AI-powered version of Alexa is not yet ready for deployment, as former employees indicated a lack of sufficient data and the necessary chips for running the advanced language model. The company has allegedly shifted its priorities towards developing generative AI for its cloud computing arm, Amazon Web Services.
Amazon has disputed the claims made by former employees, stating that they are misinformed regarding the company’s current AI initiatives. The company reiterated its goal of building the best personal assistant in the world, asserting that its artificial intelligence team has access to critical resources, including proprietary Trainium chips and Nvidia GPUs.