Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in substantial losses for the company. Between 2017 and 2021, Amazon incurred over $25 billion in losses associated with its Echo, Kindle, and other devices, as revealed by internal documents and anonymous sources, according to the Wall Street Journal.
Although Amazon boasts a customer base in the hundreds of millions for its devices, it seems that users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms and accessing free applications, rather than making purchases on Amazon.
A former high-ranking employee at Amazon expressed concerns about the direction the company has taken, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking a solution, which may involve the introduction of a paid version of Alexa. However, some engineers within the company are skeptical about the potential impact of this new offering.
An Amazon spokesperson emphasized the company’s focus on the value derived from its services beyond just device sales, noting that its Devices & Services unit has established several profitable ventures and is well-positioned for continued success.
Meanwhile, concerns have surfaced regarding the readiness of Amazon’s new AI-powered Alexa, first showcased in September. Former employees noted that the technology is not yet prepared for deployment due to insufficient data and access to necessary chips for the large language model (LLM) that would power the updated assistant. Furthermore, it has been reported that the company has shifted its attention towards enhancing generative AI for Amazon Web Services, deprioritizing the AI-powered version of Alexa.
Amazon has countered these claims, asserting that its former employees lack accurate information about its AI initiatives. The company insisted that its Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia graphics processing units (GPUs). Amazon reiterated its commitment to building “the world’s best personal assistant.”