Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly fallen short, resulting in significant losses for the company. According to the Wall Street Journal, internal documents and sources indicate that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, users of the Alexa-enabled Echo speakers primarily utilize them for free applications like setting alarms, rather than for making purchases.
A former senior employee expressed concerns about the company’s hiring and investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response, Amazon’s CEO Andy Jassy is exploring solutions and is said to be launching a paid tier for Alexa. However, some engineers fear that this new version may not significantly change the company’s fortunes.
In a statement, an Amazon representative emphasized that the company focuses on the value created when customers use its services, not solely when they purchase devices. They noted the Devices & Services organization has established profitable businesses that are expected to continue growing.
Additionally, reports indicate that Amazon’s new AI-powered Alexa, which was showcased in September, is still in development and may not be ready soon. Sources claimed the company lacks sufficient data and access to necessary processing chips for the large language model driving the upgraded version. Furthermore, it appears that Amazon has shifted its focus towards enhancing generative AI for its cloud division, Amazon Web Services.
In response to these claims, Amazon stated that its former employees are misinformed and that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company maintains that its goal for Alexa remains to develop “the world’s best personal assistant.”