Amazon’s strategy to profit from its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021, according to the Wall Street Journal. Internal documents and sources indicate that while Amazon has attracted hundreds of millions of customers to its Echo and Kindle products, many users primarily utilize the Echo speakers for basic functions like setting alarms rather than for shopping.
A former senior employee expressed concern about the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid version of Alexa. However, some engineers involved are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the overall value created for customers using its services, not just the sale of its devices. They noted that the Devices & Services division has successfully established several profitable businesses and is expected to continue doing so.
Moreover, reports suggest that Amazon’s new AI-powered version of Alexa, showcased in September, may not be ready for deployment. Former employees claim the company lacks sufficient data and access to the necessary chips to support the advanced language model behind the new virtual assistant. Additionally, it appears Amazon has chosen to prioritize generative AI development for its cloud computing arm, Amazon Web Services, over advancing Alexa’s AI capabilities.
In response to these claims, Amazon has asserted that its former employees are misinformed about the current status of Alexa’s AI initiatives, asserting that they have access to both proprietary Trainium chips and Nvidia GPUs, with the ongoing goal of creating the leading personal assistant.