Amazon’s initiative to generate revenue through its Alexa-enabled devices has reportedly not been successful and has resulted in substantial losses for the company. According to a report from the Wall Street Journal, internal documents and sources familiar with the situation reveal that Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Despite boasting hundreds of millions of customers for these devices, it appears that the Alexa-enabled Echo speakers are primarily utilized for setting alarms and using free applications, rather than making purchases.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the ongoing issues, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of Alexa. However, some engineers working on the upgrade have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s commitment to providing value to customers beyond merely selling devices, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Additionally, Amazon’s new AI-powered Alexa, which was demonstrated in September, is reportedly not ready for deployment, according to former employees. They indicated that the company lacks sufficient data and access to necessary chips for the large language model that would support the updated assistant. Reports suggest that Amazon has shifted its focus away from AI-powered Alexa development to prioritize generative AI for its cloud computing division, Amazon Web Services.
Amazon has responded to these claims, insisting that its former employees are misinformed regarding the current state of Alexa AI initiatives. The company asserted that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, and reaffirmed its goal to create “the world’s best personal assistant.”