Amazon’s efforts to generate revenue from its Alexa-enabled devices have fallen short, resulting in billions of dollars in losses. According to a report from the Wall Street Journal, the online retail giant lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from unnamed sources.
Despite having hundreds of millions of users for its devices, Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms, rather than for shopping on Amazon. A former senior Amazon employee expressed concerns about the effectiveness of their workforce, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the launch of a paid version of Alexa. However, some engineers involved in developing this new tier have expressed skepticism about its potential success.
An Amazon spokesperson stated, “We’re focused on the value we create when customers use our services, not just when they buy our devices.” They emphasized that the Devices & Services division has successfully established profitable ventures for the company and is well-positioned for continued success.
In addition, Amazon recently introduced a new artificial intelligence-powered version of Alexa, but former employees claim it is far from completion. The company reportedly lacks sufficient data and access to the necessary chips for the large language model that will drive this new assistant. Furthermore, Amazon is said to have prioritized its generative AI projects for Amazon Web Services over advancing the AI capabilities of Alexa.
In response to these claims, Amazon contended that its former employees are misinformed about its current AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to creating “the world’s best personal assistant.”