Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to a report from the Wall Street Journal, Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from unnamed sources. Although Amazon has built a large customer base for its devices, users primarily utilize Echo speakers for basic functions like setting alarms and accessing free applications, rather than making purchases.
A former senior employee expressed concern about the situation, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions and plans to introduce a paid tier for its voice assistant. However, some engineers working on the paid version of Alexa are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s focus on the value created when customers engage with its services, rather than just device sales. They stated that the Devices & Services division has successfully established several profitable ventures and is positioned for future success.
In addition, Amazon’s latest version of Alexa, powered by artificial intelligence, is reportedly still underdeveloped, according to former employees. It is claimed that the company lacks sufficient data and the necessary hardware to operate the advanced language model driving the new assistant. Furthermore, Amazon has reportedly shifted its focus towards developing generative AI technology for its cloud services division, Amazon Web Services.
Amazon refuted claims made by its former employees, arguing that their assessment of the Alexa AI developments is inaccurate. The company stated that the Amazon Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia graphics processing units (GPUs) and reiterated its commitment to developing “the world’s best personal assistant.”