Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded positive results, reportedly costing the company billions of dollars. According to internal documents and sources familiar with the situation, Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers using these devices, the Echo speakers are mainly utilized for basic tasks like setting alarms rather than for shopping on the Amazon platform.
A former senior Amazon employee expressed concerns about the company’s investments, 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 exploring solutions, including the launch of a paid version of the voice assistant. However, some engineers working on the project are skeptical about its effectiveness.
An Amazon spokesperson emphasized the company’s commitment to creating value through its services beyond just device sales. They stated, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so in the future.”
In addition, reports indicate that Amazon’s newly developed AI-powered Alexa, showcased in September, is not yet ready for deployment. Former employees highlighted a lack of data and insufficient access to necessary hardware for operating the large language model that powers this updated version. The company has allegedly shifted its focus toward advancing generative AI for its cloud unit, Amazon Web Services.
Amazon has disputed these claims from former employees, asserting that they are misinformed about the AI initiatives. The company insists that its Artificial General Intelligence team has the resources required, including both in-house Trainium chips and Nvidia GPUs, and is committed to developing “the world’s best personal assistant.”