Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to the Wall Street Journal, the online retail giant has lost more than $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers for its devices, the primary use of Alexa-enabled Echo speakers appears to be for setting alarms and utilizing free applications rather than for shopping on Amazon.
A former high-ranking Amazon employee expressed concerns about the effectiveness of the company’s staff additions and development efforts, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, CEO Andy Jassy is reportedly seeking solutions and is considering launching a paid version of the Alexa voice assistant. However, there are apprehensions among Amazon engineers about the potential success of this initiative.
An Amazon spokesperson commented, “We focus on the value we create when customers use our services, not just when they buy our devices.” The spokesperson added that the Devices & Services organization has successfully established several profitable ventures for the company and is positioned to continue on that path.
Meanwhile, reports suggest that Amazon’s new AI-powered version of Alexa, showcased in September, is not yet ready for launch. Former employees indicated that the company lacks sufficient data and access to essential technology to support the advanced language model necessary for this version of the assistant. Furthermore, it seems that Amazon has shifted focus toward developing generative AI for its cloud division, Amazon Web Services, which may have impacted the timeline for the new Alexa.
In response to these claims, Amazon has stated that the assessments made by its former employees are inaccurate and that the Amazon Artificial General Intelligence team has the necessary resources, including both in-house Trainium chips and Nvidia GPUs, to support its AI initiatives. The company’s commitment remains toward creating “the world’s best personal assistant.”